Annual Report and Accounts - org.nhslothian.scot · inherent risk of “hitting the target but missing the point”. Part of the duty of Best Value is “ to make arrangements Part

Annual Report and Accounts

Year ended 31st March 2018

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NHS LOTHIAN ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 31

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INDEX PAGE

Annual Report 3

Section A: The Performance Report

• Overview

• Performance Analysis

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Section B: The Accountability Report

• Corporate Governance Report - Directors report - Statement of Health Board Members’ Responsibilities in respect of

Accounts - Statement of Chief Executive’s Responsibilities as the Accountable

Officer of the Health Board - The Governance Statement

• Remuneration and Staff Report

• Parliamentary Accountability Report

40 40 40

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44 45 54 68

Independent Auditor’s Report 69

Accounts’ Primary Financial Statements 72

Notes to the Accounts 77

Accounts Direction 118


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ANNUAL REPORT

SECTION A: THE PERFORMANCE REPORT 1. Overview This Overview aims to succinctly provide any reader with sufficient information to understand the NHS Board, its purpose, the key risks to the achievement of its objectives and how it has performed during the year. Should you wish to find out more detailed information we have provided this in the rest of the Performance Report, the Accountability Report and the financial statements. NHS Lothian routinely publishes a wide range of information on its services and activities on its website which you can find at: http://www.nhslothian.scot.nhs.uk/Pages/default.aspx a) Statement from the Chief Executive on the Performance of the NHS Board I would like to acknowledge the hard work of all of the Board’s staff, and thank them for all their efforts which allow us to continue to provide safe, effective, person-centred care. For a number of years NHS Lothian has had an annual awards event, Celebrating Success, to recognise those employees who embrace NHS Lothian’s core values of Care and Compassion, Dignity and Respect, Quality, Teamwork, and Openness, Honesty and Responsibility. It is an opportunity to recognise examples of inspirational and selfless work by our employees. Members of the public can nominate their Health Hero. You can find out more ab`out this process, including details of previous winners at the following link: http://www.nhslothian.scot.nhs.uk/MediaCentre/CelebratingSuccess/Pages/csa.aspx As is the case for every year, in 2017/18 NHS Lothian and its employees have produced a wide range of achievements and improvements. You can find a summary of these in Section 2 of this Performance Report, the Performance Analysis.

Developing Organisational Culture and Leadership The fundamental challenge facing the leadership team is how to address the fact that the growth in demand is outstripping the growth in resources (human, financial and estate). There is also a more complex organisational landscape with the emergence of integration joint boards (“IJB”) and the continued development of regional planning across health board areas. We need to deliver genuinely transformed models of service delivery – encouraging supported self care, prevention, alternatives to secondary care in the community, primary and social care and new ways of delivering secondary and tertiary care. We need to embrace technology, innovation and experimentation and we need to have the capacity and capability to take giant leaps as well as small steps of change. In my previous statements I have set out how we have made changes to the leadership structure which should help to free up my role as the Chief Executive to focus principally on strategic transformational change and also to have a stronger leadership role in the East of Scotland region (see below). The aim of the changes to the leadership structure is to develop a culture that promotes enabled, clinically-led, distributed leadership. I use the term “distributed leadership” to express where front line clinicians feel enabled and supported to experiment and innovate in pursuit of improving the quality of their services. This is often quite at odds with the micro-management often associated with top-down targets which is so evident in our current system. “Distributed leadership” requires local clinical leaders and their teams to have the motivation and confidence to take responsibility for improving things, and being willing to try new things which may or may not work.

Our Quality Management System (QMS) is the means to turn this aspiration into reality. The QMS approach begins by understanding and describing the systems underpinning core, day-to-day processes and pathways. We then deploy our analytical service to extract the data underpinning these pathways to understand the causes and consequences of unwarranted variation. By training, enabling and empowering front line teams to manage quality, tests of change to continuously improve performance are then undertaken. These will be supported by


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patient-level costing systems, which will enable us to understand the cost savings associated with reduction in unwarranted variation and waste. Nowhere in Lothian have I seen a better example of this distributed leadership model than in the Quality Improvement Programme for Mental Health. The Quality Improvement Team, supported by senior leadership in our mental health services, have generated a real enthusiasm and created a momentum around engagement and participation that is frankly astonishing. We hoped that people would engage but now our problem is keeping up with demand. The planning for the next three years has some extremely strong foundations to build upon. I look forward with great interest to seeing this programme go from strength to strength, working with our staff, our partners, our patients, and our patients to improve the quality of our mental health services in Lothian.

Emergency Access Standard In my 2016/17 statement I highlighted that in the previous 5 years we had undertaken a lot of work to develop the organisation’s culture, and summarised some of the measures that we had put in place. During 2017/18 specific concerns were raised under the Board’s whistleblowing arrangements about the alleged mismanagement of the emergency access standard waiting times reporting and an alleged culture of bullying and intimidation in the emergency department at St John’s Hospital. How we address the waiting times issues is critically important. The organisation has worked very hard to promote a culture based around Our Values, and the value of Openness, Honesty and Responsibility, is particularly important in this context. When the concerns were raised steps were immediately taken to ensure that the issues were promptly escalated to the Board and the Scottish Government, and that the issue would be discussed in a public meeting of the Board. Management commissioned a report from the internal auditors. Additionally the Scottish Government commissioned the Scottish Academy of Medical Royal Colleges to review the issue and make recommendations for improvement. Management were clear that immediate steps needed to be taken to support staff and improve the systems of internal control, rather than wait for the external review to conclude and report. Consequently in December 2017 the Board received the internal auditors’ report together with management’s analysis of the issues raised and an action plan. Promoting a culture based upon openness and honesty had been at the very top of the leadership agenda for the previous five years, and it could not have received greater prominence. The review of the issues prompted some serious soul-searching and reflection on how far and deep the programme of changing culture had reached, and what the organisation had actually learned over the previous five years. It highlights that the endeavours to improve the organisational culture in every aspect of operational practice should not be underestimated, and requires relentless effort. The reported issues highlight the challenges of creating a quality-driven organisation through distributed leadership, when the starting point is a top-down target-driven organisation that is subject to micro-management. The Board has in one of its development sessions considered the topic of performance management, and the inherent risk of “hitting the target but missing the point”. Part of the duty of Best Value is “to make arrangements to secure continuous improvement in performance whilst maintaining an appropriate balance between quality and cost.” We must bear in mind that changing organisational culture is a long-term programme of work, particularly in an organisation of the scale and complexity of NHS Lothian. The goal of continuous improvement does require continuous effort and systematic rigour, which our quality management approach will increasingly provide in the future. The steps that have been taken have been based on finding out what happened, why it happened, and what can be done to better support our employees going forward. Management have developed an Emergency Department Improvement Plan which includes:

• A new Standard Operating Procedure (SOP) aligned to national guidance to support the accurate recording and reporting of Emergency Department performance

• An emergency department SOP Dashboard to support management in reviewing the process.

• A Staff Organisational Development Programme to support individual and team development within and across sites

• Refreshed terms of reference and membership for the Access and Governance Committee, so as to rebalance organisational focus on unscheduled care along with scheduled care.

• Increasing the visibility of senior management across the adult sites.


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Waiting Times Throughout 2017/18 unfortunately there has been an increase in waiting times for our inpatients, day cases, and outpatients. There has been a significant focus on action to deliver improvements to mitigate the impact on patients. Some of measures taken are summarised below: Outpatients

• We have reduced the number of people who do not attend scheduled appointments, thereby improving the use of our operational capacity.

• We have reduced the demand for return appointments, thereby creating more capacity for new appointments.

• We have introduced measures to keep in touch with patients with the longest waits, and developed options to escalate their care if their clinical condition requires this.

Inpatients and Day Cases We have taken forward an improvement programme to improve the efficiency and effectiveness of our theatres, with an aim of achieving 88% utilisation of funded theatre sessions. This has included:

− Developing the Workforce – This includes enhancing the training & development of our teams, and reducing the use of supplementary staffing.

− Hospital Sterilisation and Decontamination Unit – Improving the speed and reliability of the supply of instruments to theatres, so that we significantly increase the success rate of achieving the ‘four R’s’ (Right Kit, Right Condition, Right Place, Right Time).

− Right Sizing Emergency Theatre at Western General Hospital – Ensuring that no patient waits longer than is clinically acceptable for emergency surgery.

− Increasing the Number of Elective Day Case Surgical Procedures – This is being taken forward in line with the recommendations from the British Association of Day Surgery.

− Weekly theatre ‘Matrix’ meetings to ensure optimum booking of theatre sessions, rolling out a standard approach across all acute sites

Diagnostics A number of actions have already been put in place to help reduce the gap between demand and capacity for endoscopy (a procedure where the inside of your body is examined using an instrument called an endoscope). We have created a sustainable plan to describe the actions and resources required to achieve a balanced position for endoscopy procedures over the course of the next three years. Child and Adolescent Mental Health Services (CAMHS) We have put in place a CAMHS recovery plan which focuses on reducing the number of individuals who have the longest waits for assessment. The service continues to review capacity and demand modelling and monitor a number of transformational measures to support the ongoing improvement of waiting times. Psychological Therapies We agreed and implemented a Service Recovery Plan for all adult services. Over the past 15 months this supported a significant reduction (80%) in those waiting over 18 weeks for their first outpatient appointment. In the next year, we will deliver further improvements through:

• Treating patients who have waited the longest.

• Increasing the availability of group interventions.

• Increasing the uptake of computer-based Cognitive Behavioural Therapy for those with mild to moderate presentations of anxiety and depression.

• Taking action to improve patients’ attendance rates at scheduled appointments.


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Key Property Developments in 2017/18 In 2017/18 a significant number of key property developments were delivered in Lothian. As part of our £28m programme of health and social care investment, we completed partnership centres in Firhill, Pennywell and Blackburn, and were providing services in all three buildings by December 2017. We also completed new GP premises in Ratho and Leith Walk, and also upgrades in Loanhead and Prestonpans. The First Minister opened the first part of the new East Lothian Community Hospital, the outpatients department on 21st March 2018. The project to develop the full hospital will continue on a phased basis until 2021. Patients moved into the £48 million Royal Edinburgh Building over the summer of 2017. The team are now working on the business case to develop the next phases of the Royal Edinburgh Hospital campus, incorporating services from the Astley Ainslie and Liberton Hospital sites. At St John’s Hospital in Livingston we opened increased theatre capacity for ophthalmology and hand surgery. Additionally construction of the new £150 million Royal Hospital for Children and Young People and the Department of Clinical Neurosciences has continued over the last year. The handover of the completed building will be in 2018. In 2017/18 we also concluded contracts for the sale of a number of sites, including Corstorphine Hospital, Bangour Village Hospital, and the Royal Hospital for Sick Children. Looking to the future and continued investment in our facilities, the Scottish Government has granted NHS Lothian approval to proceed with the re-provision of the Princess Alexandra Eye Pavilion, infrastructure upgrades at St John’s Hospital, and work in the Edinburgh Cancer Centre (at the Western General Hospital).

Looking Ahead The Scottish Government required NHS Boards to prepare an Annual Operational Plan from 2018/19, replacing the former Local Delivery Plan. This Annual Operational Plan focuses primarily on providing a high level picture of NHS Lothian’s anticipated financial position in 2018-19, outlines our approach to developing our workforce and delivering a number of key performance standards to ensure we continue to improve outcomes for people who use our services. It is aligned with the four Lothian integration joint boards’ strategic plans. The Annual Operational Plan focuses on performance relating to cancer pathways, diagnostic tests, access to new outpatient appointments, mental health services, delivery of guarantees associated with elective inpatient care and day case treatments, and the emergency access standard. The aim is to improve the performance on these key standards to achieve, as a minimum, the level of performance delivered in March 2017. The plan includes a requirement to access additional capacity to support the treatment time guarantees but also continue with our programme of transformational change in the way we provide services. Transformational change will require a whole systems approach and therefore it is important to recognise the contribution of the four Lothian integration joint boards’ (IJB) 2018-19 strategic plans, delivery of the IJB performance indicators, and the progress in shifting the balance of care from hospital to community services. The Annual Operational Plan includes an outline of NHS Lothian’s 2018-19 Financial Plan which includes the funding implications associated with providing additional capacity. This plan also provides an assessment of the deliverability of this additional capacity within the timescales. During 2017/18 we have been developing our thinking with regard to strategic financial management, with the aim of achieving long-term financial sustainability. We recognise that the NHS Board cannot achieve this solely by its own actions, and there is a need to work effectively on a national and regional basis and in partnership with other public bodies, in order to deliver the required scale of improvement and transformation. The Scottish Government’s Health and Social Care Delivery Plan mandates closer regional working between Boards to maximise opportunities for sustainability and improved performance. The East of Scotland region comprises NHS Fife, NHS Borders and NHS Lothian and a programme board has been established with the three Board Chief Executives and lead directors. I am the lead Chief Executive for the regional work.


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The work streams that are being actively pursued within the region encompass:

• Primary, community and social care, within this a significant focus on the management and prevention of diabetes

• Acute services (incorporating laboratory medicine, elective strategy, major trauma, gastroenterology, ophthalmology, and orthopaedics)

• Regional Business Support Services

• Prevention and addressing the social determinants of health

• Finance

• HR and workforce

• Communications and engagement

• eHealth/digital The process of developing regional working is underway, and we provided a progress report to the Scottish Government on 31 March 2018. The NHS Board has revised its Vision and Corporate Objectives, to recognise that it will take several years to develop and implement the proposals which will deliver the necessary changes. The Corporate Objectives now cover a 5 year period, rather than one year. Our Vision Over the course of the next five years, everyone is able to live longer healthier lives at home, or in a homely setting and, that we will have a healthcare system where:

• We have integrated health and social care

• There is a focus on prevention, anticipation and supported self-management

• When hospital treatment is required, and cannot be provided in a community setting, day case treatment will be the norm

• Whatever the setting, care will be provided to the highest standards of quality and safety, with the person at the centre of all decisions supported through House of Care and Realistic Healthcare approaches

There will be a focus on ensuring that people get back into their home or community environment as soon as appropriate, with minimal risk of re-admission Our Mission

• improving the health of the population,

• improving the quality of healthcare,

• achieving value and financial sustainability, and

• improving staff experience. Better health, better care, better value Our Values

• Care and Compassion

• Dignity and Respect

• Quality

• Teamwork

• Openness, Honesty and Responsibility Our Corporate Objectives 2018/19 - 2022/23

1. Protect and Improve the Health of Our Population 2. Improve Quality, Safety and Experience Across the Organisation. 3. Improve Access to Care and Treatment. 4. Shift the Balance of Care from Hospital to a Community Setting 5. Improve the Experience of Our Staff 6. Achieve Greater Financial Sustainability and Value. 7. Develop Workforce Plans including Workforce Supply. 8. Utilise Innovation and Technology to Support Transformational Change.


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9. Work with Regional and National Partners to Support Transformational Change.

b) History, Purpose and Activities of the NHS Board Lothian Health Board (the “Board”) was established in 1974 under the National Health Service (Scotland) Act 1972, and is commonly referred to as “Lothian NHS Board”. The National Health Service (Scotland) Act 1978, other law, and Government directions determine the Board’s constitution, duties and functions. Health Boards carry out functions on behalf of Scottish Ministers, and are required to follow any regulations or directions that may be made. You can find out more about how NHS Lothian operates by looking at its website, and you can find a summary of information on the system of governance in the Board Members’ Handbook: http://www.nhslothian.scot.nhs.uk/OurOrganisation/BoardCommittees/handbook/Pages/default.aspx The Board is responsible for the healthcare services for the residents of four local authority areas (City of Edinburgh, East Lothian, Midlothian and West Lothian). The Board also provides a wide range of specialist services for people from across Scotland, including liver and kidney transplantation, neo-natal intensive care, cancer services and complex surgery. Integration of Health & Social Care Services During 2015/16 an integration joint board (IJB) was established in each of the four local authority areas within the NHS Lothian boundary, under the terms of the Public Bodies (Joint Working) (Scotland) Act 2014. The IJBs are distinct legal entities separate from the NHS Board and the relevant local authority. The IJBs are responsible for the “integration functions” which the NHS Board and local authority has delegated to them. The law required the NHS Board and the relevant local authority to delegate certain functions to the extent that they are provided to people who are at least 18 years old, namely adult social care, and all adult community health care and specific adult hospital services relating to unscheduled care.

The NHS Board took the option to delegate further functions, such as the provision of the following services to people who are under 18 years of age:

▪ Primary Medical Services and General Medical Services (including GP Pharmaceutical services)

▪ General Dental Services, Public Dental Services and the Edinburgh Dental Institute

▪ General Ophthalmic Services

▪ General Pharmaceutical Services

▪ Out of Hours Primary Medical Services

▪ Learning Disabilities Each IJB prepares a strategic plan and then directs the NHS Board and the relevant local authority as to how those functions are to be carried out. The IJB is required to have regard to the national health & wellbeing outcomes, the integration delivery principles, and the needs of localities within the local authority area. Each IJB also has to annually publish a performance report. You can access this more information on health & social care integration through the link below: http://www.nhslothian.scot.nhs.uk/community

The NHS Board continues to directly carry out all of the functions and services which it has not delegated to IJBs. c) The Key Issues and Risks that could affect the NHS Board in delivering its objectives

The Board agreed that a Strategic Plan should be developed in order to implement the Strategic Clinical Framework which it previously agreed in May 2013. The Board’s Strategic Planning Committee led the development of the Strategic Plan 2014-2024 (“Our Health, Our Care, Our Future”), which set out in detail the challenges that the Board faces, under four broad headings, namely:

• Demography, inequalities and ill health

• Multimorbidity

• Health service demand

• Tighter finances


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The Board’s website contains information relating to the Strategic Plan: http://www.nhslothian.scot.nhs.uk/OurOrganisation/OurHealthOurCareOurFuture/Pages/default.aspx

The fundamental challenges identified within Our Health, Our Care, Our Future have not changed. The population is growing, and with people living longer, the population is ageing with an increasing number of frail individuals with complex needs. A growing, ageing population increases the demand for NHS services, which will drive up expenditure.

Chart 1: Population Growth in Lothian

It is expected that by 2041 the population in Lothian will have increased by 16.5% to 1,025,000 people. In 2016 there were more births and fewer deaths in Lothian than in 2015. While Lothian has the lowest overall fertility rate in Scotland, the fertility rate among 35-39 year olds and 40-44 year olds is amongst the highest.

Life expectancy has been increasing for almost 50 years in Scotland, however there is evidence that this is starting to stall. While male life expectancy has slightly increased in line with long term trends, female life expectancy did not change between 2013-2015 and 2014-2016 in Lothian.

Table 1: Life Expectancy in Lothian and Scotland, 2014-2016 (National Records of Scotland)

Male Female

East Lothian 78.3 82.7

Edinburgh 78.0 82.2

Midlothian 77.9 81.4

West Lothian 78.3 80.8

Lothian 78.1 81.9

Scotland 77.1 81.1 People moving into the the Lothian area also boost the population.


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The death rate continues to fall across Lothian. The most common causes of death in Lothian continue to be circulatory (cardiovascular) diseases, cancers (particularly lung, colorectal and breast cancers) and respiratory diseases. Health Inequalities While the overall health of people is improving, with fewer deaths, the incidence and prevalence of some diseases is increasing, e.g. cancer and diabetes. There are significant health inequalities. People living in the most affluent communities in Lothian can expect to live 21 years longer than people living in the most deprived communities. People living in deprived communities develop multi-morbidity 10 to 15 years earlier than the least deprived. We also know that, while those aged over-65 years have two or more conditions, and individuals aged over 75 years have three or more conditions, multi-morbidity is not just experienced by older people. There are more people aged under 65 years with multi-morbidity than those aged over 65 years. This is a major factor associated with continual rising demand for access to healthcare services in Lothian. In addition, the growth in the younger population is also having a major impact on the demand for Child and Adolescent Mental Health Services (CAMHS). The Board has to be flexible in how it provides services, so as to effectively meet the needs of people who have the greatest health challenges. Prevention, which includes a focus on early years’ services, is key to addressing health inequalities. The regional planning work includes prevention, and has identified emerging priority areas such as diabetes, smoking, prevention and the need to address the negative impacts of adverse childhood experiences. The Board actively engages with community planning partnerships, and associated strategic planning groups which focus on children’s services. This engagement is essential to addressing the fundamental drivers of health and health inequalities. Areas of focus include income maximisation, homelessness and educational attendance. The Board has a Health Inequalities Strategy, which you can find this at: www.nhslothian.scot.nhs.uk > Our Organisation > Strategies > Health Inequalities Addressing the Challenge of Financial Sustainability The growth in demand requires the Board to find new ways to deliver service, which will allow it to maintain or improve its performance, and have a positive impact on health outcomes. However the Board does face a significant challenge to achieving financial sustainability over the medium to long term. The Board’s projection for its financial gap over the next five years is at Table 2 below:

Table 2: Projected Financial Gap after Recovery Actions – 2018/19 – 2022/23

2018/19 2019/20 2020/21 2021/22 2022/23

£21.4m £58.3m £80.8m £107.5m £131m

During 2017/18 the Board has been developing a strategic approach to achieving financial sustainability. This approach recognises that there is a limit to what the Board can do itself, and that there are some issues which require actions and decisions to be made at a regional and national level, and possibly across the public sector.


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Chart 2: A four-tiered approach to achieving financial sustainability

The success of the efforts made at Tiers 2, 3 and 4 has the potential to reduce the extent to which NHS Scotland

and the Board has to consider opportunities under Tier 1 (“Difficult Choices”).

The Scottish Government has developed a National Financial Framework which sets out the parameters within which the health and social care system will operate. There is a National Sustainability & Value Group which will identify a range of opportunities, and there will be national sustainability & value programmes to take this work forward. The Regional Delivery Plan will also take into account matters pertinent to the top two tiers of the Lothian Financial Strategy “triangle”, namely “Transformational Change” and “Difficult Choices”. Within Lothian, the management team will ensure that any national and regional work is fed into work progressed within Lothian. A significant proportion of the Board’s newer estate has been procured through Public Private Partnership contracts most recently including Non Profit Distributing model contracts as well as a number of now older Private Finance Initiative projects. It is recognised that these contracts have a key role in supporting the delivery of key healthcare services and require proactive management of financial risks. In support of the Facilities Directorate’s Contract Management team, the Commercial PPP Group, chaired by the Director of Finance, oversees all such contracts so as to provide greater assurance to the Finance and Resources Committee on this subject, monitor performance against the contracts and to look for opportunities for improvement. The Group membership includes the Deputy Chief Executive and representatives from finance, facilities and capital planning. The Board’s Corporate Risk Register had the following risks at the end of 2017/18:-

Table 3: Corporate Risk Register as at 31 March 2018

Title Risk

Score Title Risk

Score

GP workforce sustainability Very High

Medical workforce sustainability High

Timely discharge of inpatients Very High

Management of deteriorating patients in adult acute inpatient services.

High


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Title Risk Score

Title Risk Score

Access to treatment – patient (clinical risk)

Very High

Facilities fit for purpose High

Access to treatment – organisation risk Very High

Management of violence & aggression

High

Unscheduled Care: 4 hour performance Very High

Roadways and traffic management High

The scale or quality of the Board's services is reduced in the future due to failure to respond to the financial challenge.

Very High

Healthcare associated infection Medium

Management of complaints and feedback

High Nursing workforce – safe staffing levels

Medium

As a result of action taken during 2017/18, management have reduced the risk scores for ‘Management of complaints and feedback’, and ‘Healthcare associated infection.’ Management have also re-defined some of the risks to make them clearer. The Board had a development session on risk management in May 2018. The four integration joint boards each have their own risk management system and risk register. The Board’s risks have been and are being reviewed to recognise the role of the integration joint boards, and that some risks are now shared with them. In 2017/18, improvement work has been progressed, which aim to improve performance in subjects which are on

the Board’s corporate risk register. The finance risk has been discussed above, and the following is a summary

of the actions taken to address the other very high risks.

(i) General Practice Sustainability The Board’s Healthcare Governance Committee has throughout the year received reports on the action plan to address the risks associated with GP sustainability. The action plan includes: - reaching an agreed position on restricted lists (completed) - agreeing a joint set of priorities (ongoing) - integration joint boards’ strategic plans including more on primary care, and series of primary care summits

(ongoing) - a focus on GP recruitment via various initiatives (ongoing)

The Scottish General Practices Committee voted to accept the terms of the 2018 General Medical Services Contract in January 2018. This contract is a key part of the Scottish Government’s plans to transform primary care services, and aims to reduce the risks to GPs through measures such as:

• changing the GP role towards that of an Expert Medical Generalist who leads a team;

• moving the GP role away from the responsibilities of managing a team and the current responsibility for premises;

• introducing a new workload formula for practice funding to improve the stability of income; and

• reducing the workload through the health & social care partnerships employing more staff to take on duties which GPs currently perform.

• . The Board considered a report on this subject in February 2018, and agreed an implementation approach for the complex changes which will have to be negotiated and managed by the Board and the health & social care partnerships over the next three years. Subsequent to this, we have appointed a Director of Primary Care Transformation to support the implementation of the new contract, who will work with our key stakeholders to deliver the necessary transformation of our primary care services and workforce.


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(ii) Timely Discharge of Inpatients When patients are not discharged from hospitals in a timely manner, there is a risk that it can lead to poor experience for patients. Additionally if there is a considerable volume of patients who have not been discharged, it disrupts the flow of patients through the health system, and prevents new patients from being admitted. This leads to the Board not being able to meet the treatment time guarantee. The number of patients whose discharge has been delayed is an indicator of how effectively the whole system is working. The NHS Board, the relevant local authority, and the relevant integration joint board have to work effectively together to address this issue. Below is a summary of some of the measures taken within each local authority area. Edinburgh There is an improvement programme which includes:

� initiatives to reduce demand; � development of self-assessment; � falls prevention work; � engagement with the community and clinicians with regard to realistic care; � a comprehensive review of the current care-at-home contract, so as to increase affordable care capacity.

New care-at-home providers are being encouraged into the Edinburgh market; � development of outline strategic commissioning plans for all client care groups, and these will be

developed further in 2018. A performance monitoring group, with representatives from the Board, the council, the integration joint board, and the Scottish Government, oversees the improvement work. The group prioritises the most effective actions, and supports the acceleration of this work. . West Lothian There have been significant challenges within the care-at-home and care home sector, which has delayed the discharge of inpatients. A wide range of measures have been taken which have included:

� operating a Rapid Access Clinic and a Frailty Hub so as to provide an alternative to admitting a person to hospital;

� investing resources to increase the capacity of the in-house re-ablement team; � taking action to address the performance of the framework contractors for care-at-home; � improving care and patient experience through taking various actions as part of the Frailty

Programme; � establishing an intermediate care facility of eight beds for step-down care. This provides short stays

(up to 28 days) for patients ready to be discharged from acute services, while a longer-term package of care is being arranged;

� increasing capacity in REACT hospital-at-home service so that it may operate at weekends, and increasing the capacity of the REACT care team, to prevent hospital admissions and support the timely discharge of patients;

� increasing the capacity of Joint Equipment Store, which speeds up the provision of equipment which is necessary to allow a patient to be discharged from hospital.

East Lothian During 2017/18, within East Lothian there has been a sustained reduction in the number of patients whose discharge has been delayed.


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Chart 3: The number of delayed discharges and associated occupied bed days in East Lothian

The measures which have been taken have included:

� implementing new care-at-home contracts, which have stabilised supply; � implementing hospital-at-home, hospital-to-home, discharge-to-assess, and care home support services.

Midlothian The Midlothian Enhanced Rapid Respond & Intervention Team continues to take a range of actions to avoid people being unnecessarily admitted to hospital. There has been an increase in patient activity during 2017/18, and the following is a summary of additional measures which have been put in place: � held discussions with care-at-home providers to increase their capacity to deliver packages of care; � reviewed all package-of-care referrals from hospital; � reviewed the in-house service to increase capacity; � increased the bed facility at Highbank, and took action to improve the flow of clients from Highbank to either

home with a package-of-care, or a care home; � improved the analysis of care-at-home data to improve locality working; � held an “alternatives to care at home” workshop with health and social care staff to provide context, the

challenge and information on how to support people at home with care at home being the “top up”, not the default;

� reviewed the arrangements at Edenview ward to improve the flow of patients who require post- acute care rehabilitation.

There is a weekly bed meeting which provides continuous oversight to these actions.

(iii) Modernisation of Outpatient Services The Board has a programme in place to re-design outpatient services. During 2017/18 actions which have been taken forward include:

� improving the quality of data relating to outpatient activity; � developing a tool which improves management information, which will support taking steps to improve the

productivity of outpatient departments; � developing REFHELP to improve the management of referrals to outpatient departments. REFHELP

contains evidenced and up-to-date guidelines for 15 specialties, and more specialties will be added. Clinicians from both primary care and secondary care have access to REFHELP;

� progressing the dermatology service improvement plan. In 2018 the service will pilot SKIT, an application run from a phone which takes photos of skin lesions when the patient is in primary care. The photos are subsequently transferred to the dermatology department with the referral letter, which supports the triaging process.


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During the year the Board has also entered contracts with hospitals and providers in the independent and private sector to increase outpatient capacity for clinical services which have been identified as high risk. This has contributed to a reduction in the number of patients waiting over 12 weeks for an outpatient appointment in dermatology.

(iv) Theatre Improvement Programme This programme includes several projects that, together, will achieve the aims of improved quality of patient care, staff experience and efficient use of resources within theatres. This should increase operational capacity which leads to a reduction in waiting times for patients.

Table 4: Progress in the projects within the Theatres Improvement Programme

Subject Progress

Workforce � The sickness absence rate has fallen from 8.2% to 3.8%. � The monthly spend on agency staff has fallen by 50%. � There has been more development of the staff, which has led to increased

skills and competency levels.

Booking & Scheduling

� Analysis of data and national benchmarking identified opportunities for improvement.

� An enhanced booking process has been developed and agreed.

Hospital Sterilisation and Disinfection Unit

� We have put in place joint leadership arrangements for the Unit and theatres.

� A new process to fast-track surgical trays for orthopaedics has been tested.

� A standard coding system for non-conforming trays has been implemented.

� There is an agreed timetable to introduce standard trays for a range of different types of surgery.

Right-sizing Emergency Theatre at the Western General Hospital

� It is essential that patients are appropriately prioritised, so to determine who should receive surgery first. The service has agreed a set of surgical urgency classifications across all specialties for this purpose. There is a review process in place to ensure these classifications are used properly.

� We have introduced a standard procedure for booking patients for emergency surgery.

� The average starting time for the first person seen in the emergency theatre has been improved by almost 30 minutes.

British Association of Day Surgery

� Day surgery is the admission of selected patients to hospital for a planned surgical procedure, returning home on the same day. Day surgery has the potential to provide better experience and clinical outcomes for patients, and also offers many efficiency & productivity benefits to the service.

� A multidisciplinary team is taking forward a data-driven approach to identify opportunities for improvement, and is actively consulting with the Scottish Government.

(v) Unscheduled Care: 4 hour (Emergency Access Standard) Performance The statement from the Chief Executive includes the context and a summary of the Emergency Department

Improvement Plan. Similar to the issue of the timely discharge of inpatients, the emergency access standard is

an indicator of the effectiveness of the whole health & social care system. There needs to be effective whole-

system arrangements in place to avoid people unnecessarily presenting at emergency departments, as well as

the ability (when required) to efficiently admit people into hospital from the emergency department. As described

earlier in this Performance Report, the NHS Board has delegated services which relate to unscheduled care to

integration joint boards. Consequently integration joint boards have a key role in delivering a sustainable

improvement in performance against the emergency access standard.


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d) Performance Summary

This Overview has summarised the key issues the organisation is facing, and the actions which are being taken to address the very high risks and improve performance over the longer term. These issues did affect the level of current performance against some of the 2017/18 Local Delivery Plan standards, essentially those relating to the timely access to services and treatment. There is more information on the access standards in the performance analysis section. The Board is currently meeting standards associated with:

� Healthcare Acquired Infection: Clostridium difficile (rate per 1,000 bed days, aged 15+) � 48 Hour Access to a member of the Primary Care Team � Alcohol Brief Interventions � IVF treatment � Early Access to Antenatal Care

The Board also operated within its financial limits in 2017/18. The Scottish Government issued guidance on 9 February 2018 advising that the Local Delivery Plan process was to be replaced by a 2018-19 Annual Operational Plan. This is to focus primarily on performance, finance and workforce, and concentrated on the key standards that are most important to patients. The Board provided a draft Annual Operational Plan to the Scottish Government on 9 March 2018, and this will be the key plan for improving organisational performance in 2018/19. The executive directors regularly meet with colleagues from the Scottish Government Health & Social Care Directorate to discuss performance.

2. Performance Analysis 2A – Improvements and Achievements in 2017/18 NHS Lothian is a very large organisation which provides a wide range of functions and services. It is not possible to fully capture all of the successes of the various departments, but the table below offers just some examples of how continuous improvement is taken forward. Table 5: Examples of Improvements and Achievements

What did we do? Our Values

� A comprehensive and effective mental health quality improvement programme to ensure safe, effective and person-centred care has been established. The programme is supporting improvement projects across all mental health service and speciality areas. You can find more information on our Quality Improvement website: https://qilothian.scot.nhs.uk/about-us/

Quality

Care and

Compassion

Teamwork

• We have invested almost £300,000 in a refreshed local enhanced service to support the management of non-complex Type 2 diabetes within primary care. 98% of general practices in Lothian have signed up to deliver this enhanced service.

• A House of Care approach for people living with diabetes is now being supported in a cohort of practices in Edinburgh. The Edinburgh Health and Social Care Partnership is supporting this with investment from its long-term conditions programme, and will evaluate the benefits in 2018.

Quality

Care and Compassion

� The Plastic Surgery team at the Royal Hospital for Sick Children have purchased a 3D surface scanner and printer. This improves the treatment outcome for Microtia, a rare condition which can make the external ear very small, and is often accompanied by some hearing impairment. The new technology

Quality


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allows for the affected children to be given a replacement ear built from their rib cage.

� Our Medical Physics team have worked closely with the surgical team in refining and modifying the process for the generation of a 3D surgical template, and also performs the 3D modelling to generate these templates for use in guiding the surgeon for the construction of cartilage implant.

� The Royal Hospital for Sick Children has pioneered combining hearing implant surgery and ear reconstruction. The Ear Nose & Throat team and Plastic surgery have very close links. The first case performed using a 3D printed model for ear reconstruction was one such combined case where the surgery was performed for hearing implantation. Using 3D printing it is possible for the patient specific anatomy and malformations of the ear canal and / or the bones in the ear, to be produced as a physical model. This allows the surgeon to plan and execute the surgical procedure prior to performing the actual procedure. This improves surgical planning, particularly for difficult cases. It also improves clinical outcomes, reduces surgical time, and assists in the training of future otology surgeons.

Teamwork

Care and Compassion

� We have transformed our management reporting model for workforce matters, improving the quality, flexibility and efficiency of the process. Managers now have better information over a range of issues. It allows them to effectively manage sickness absence and monitor the completion of mandatory training. This development also helps the Board and its committees in their role in receiving assurance on staff governance.

Openness, Honesty & Responsibility

Quality

Teamwork

• A new NHS Lothian Maternity and Neonatal Care Strategy 2017 – 2022 has been developed.

• 43 health visitor studentships have been delivered to support our programme of work associated children and young mothers. We have significantly reduced health visiting vacancies, by increasing the numbers of students undertaking the Health Visiting course at Queen Margaret University, and working collegiately across all of Lothian. Given the experience of previous unsuccessful recruitment efforts, we are growing our own.

• We have recruited 30 whole time equivalent (“WTE”) pharmacists and 5 WTE technician posts to build on pharmacy support to general practices. This has delivered in excess of a £4m efficiency target.

• We have trained an additional 33 Advanced Nurse Practitioners to provide sustainable support within primary care services and to support delivery of acute hospital care.

• We have appointed Primary Care ‘Cluster’ quality leads to support improvements in the quality of care.

• We are currently recruiting to implement Outpatient Chronic Disease Monitoring Clinics in community based healthcare settings.

• We have established a Musselburgh Primary Care Access Service, involving the health and social care partnership, the three Musselburgh general practices and NHS 24. This enhanced multi-disciplinary team has improved access to primary care services in Musselburgh.

Care and Compassion

Quality

Teamwork


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• We have carried out a needs assessment for welfare advice in health settings in partnership with local authorities and the voluntary sector. We will be investing health improvement funding to provide income maximisation services in healthcare settings in West Lothian and Midlothian.

• We have appointed an out-of-hours programme manager to work with the four Lothian health and social care partnerships to develop an Urgent Care Resource Hub.

Openness, Honesty

& Responsibility

We have taken a number of measures to improve how we manage outpatients appointments:

• From April 2018, Cardiology and Health records will run a 14-month pilot of Patient Initiated Follow-Up (PIFU). This is a supported self-management approach to patient care whereby the patient assumes more responsibility for their health & wellbeing, and has ‘direct access’ back in to secondary care if there is a change or flare-up in symptoms.

• The Outpatient Redesign team has devised a questionnaire to capture the views of outpatients and their consultants on the value of their return appointments. This has highlighted a number of opportunities for change.

• We have developed an Outpatient Clinic Capacity Utilisation Reporting tool. This monitors how specialities use the physical clinic space on each site. This helps the service teams with consultant job planning, and improving service performance. It also provides information on overall capacity for future planning and service redesign.

Care and Compassion

Dignity & Respect

Quality

• In response to the recent Met Office Red Alert, the Flow Centre coordinated the safe transfer of staff to and from work so as to support the continuity of safe clinical care. This was achieved with the help of the Army, the Fire and Rescue Service, Coastguard, Scottish Power, and others.

Teamwork

� Midwives at St John’s Hospital in Livingston are amongst the first in the UK to receive training in immediate insertion of postpartum intrauterine contraception (PPIUC) or ‘coil at delivery’. This new service will allow women to access a long-acting and reliable method of contraception shortly after they have their baby, at a time when it is both safe and convenient to fit. The service has been available at St John’s Hospital, Livingston since January 2017 and was extended to the Royal Infirmary of Edinburgh from the end of August 2017. It is being conducted as part of health service evaluation project funded by the Chief Scientist Office and leading women’s health charity, Wellbeing of Women.

� The multi-professional training package has been adapted from

the Royal College of Obstetrician and Gynaecologist ‘Leading Safe Choices’ Initiative, and consists of theory training and model simulation prior to a period of workplace-based supervised practice. Both obstetric doctors and midwives have been trained in this technique to support women’s choice for PPIUC across Lothian.

� To date 24 midwives working at St John`s Hospital have attended

PPIUC training with now 6 fully-trained as supervisors. A further 15 midwives at the Royal Infirmary Edinburgh have also been trained in PPIUC insertion technique. The service has been very

Care and

Compassion

Dignity and Respect

Quality

Teamwork


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well received at both sites with more than 160 patients having received PPIUC to date. Patients have praised the ease and convenience of the service saying it was ``Great to have the option of getting it done straight away``.

We have completed two years of a five-year implementation plan to create a major trauma network for Scotland. This will be an inclusive and equitable trauma network for Scotland including a number of hospital sites, and regional networks, which deliver the highest quality of integrated, multi-speciality care to severely injured patients, saving more lives and improving the lives of patients throughout the trauma pathway – from prevention to rehabilitation. The achievements within the South-East region to date include:

� Agreed regional and national implementation plans, including detailed patient pathways.

� Agreed configuration of major trauma centres and trauma units. � Agreed Communication and Engagement plan, together with

communication links with integration joint boards and regional and strategic planners in relation to community based rehabilitation. A quarterly network newsletter will keep all stakeholders informed.

� The Scottish Ambulance Service has implemented a Trauma Desk, and are piloting the use of advanced paramedics based in major trauma centres, which will be rolled out over the next 3 years to all regions.

� A Trauma Triage Tool has also been developed to support the effective signposting of patients.

� A standardised pre-alert handover has been developed with the Scottish Ambulance Service, along with a tiered multidisciplinary trauma team response to improve the care of patients on arrival into the major trauma centres.

� We have established consultant-led trauma teams have which have a tiered-level response to injured children.

� There has been training for trauma team leaders, along with in-house trauma simulations, to refine the current processes.

� We have run multidisciplinary trauma team training days, including simulation and skills stations, which will continue throughout 2018.

� We have developed trauma booklets to ensure consistency of documentation.

� The Royal Hospital for Sick Children held a multi-professional trauma continuing professional development session. Around 50 colleagues from throughout the hospital attended the event.

� We have introduced monthly multidisciplinary major trauma morbidity and mortality meetings. This has led to a number of improvements, including the introduction of new guidelines, protocols, documentation and quality improvement initiatives.

Quality

Teamwork

Openness, Honesty & Responsibility

� Historically patients who have a pacemaker have not been able to have magnetic resonance imaging (‘MRI’) scans due to the risk of the MRI procedure interfering with their pacemakers. MRI scans do provide a high-resolution image quality and have a low radiation risk. Some newer pacemakers are ‘MR-conditional’ which means that they are designed to allow the patient to undergo a MRI scan under certain conditions.

� The first scan of a patient with an implanted MR-conditional pacemaker in NHS Lothian was undertaken successfully on 11th

Care and Compassion

Quality


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January 2018. A multi-disciplinary team out in place the g the appropriate procedures in place for these scans to be safely performed. This allows a section of the patient population to now have access to MRI scans.

Teamwork

� The Medical Physics and Clinical Radiology teams have worked together to reduce the radiation dose for the computed tomography (‘CT’) pulmonary angiogram by 35%, while maintaining the quality of the image. This work was recently published in the Clinical Radiology journal.

� We have standardised the patient safety screening questionnaires for Lothian and Fife, reducing unnecessary variation.

� We have formed multidisciplinary image optimisation teams, to reduce the radiation risk to patients from imaging, particularly CT scans.

Quality

Teamwork

Care and Compassion

� All NHS Lothian Laboratories are either accredited or have been offered accreditation to the ISO 15189:2012. This is an international standard of accreditation for medical laboratories, which was introduced in 2012. It provides assurance that laboratories are providing a high quality, safe and accurate service as recognised by the United Kingdom Accreditation Service.

Quality

� The clinical scientists within the biochemistry team have extended their working day, which means they are more involved in patient tests later in the day. This frees up the time of the Lothian Unscheduled Care Service, which ultimately improves the patient pathway and reduces hospital admissions.

Teamwork

NHS Lothian Laboratory Medicine has a Science Training School sited within St John’s Hospital, Livingston. This School has been developed in conjunction with Fife College and consists of a classroom, resource room and a laboratory which operates to ISO 15189 offering students the unique experience of working within a hospital laboratory.

� The Science Training School has expanded the number of programmes it delivers. The range of programmes now includes three bespoke programmes aimed at 16-18 year olds, which provide routes into other further education programmes on leaving school, or into modern apprenticeship programmes. To date 17 students have undertaken these courses all with positive outcomes.

� The School has also developed other modern apprenticeship routes, such as those for clinical and non-clinical support workers. These programmes provide a route to apprenticeships. The School has recently engaged with the University of Edinburgh so that people who have progressed through the HNC and HND programmes have a route to an accredited degree.

Quality

Openness, Honesty and Responsibility


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2B Performance against Key Non-Financial Targets Performance against Key Non-Financial Targets

The Board monitors its performance against a range of quality and performance measures, some of which are set nationally. The Board receives a Quality & Performance Report at every meeting and this includes more detailed information. All Board papers are published on the NHS Lothian website here:

http://www.nhslothian.scot.nhs.uk/OurOrganisation Information Services Scotland publishes reports on the various activities and performance of NHS Boards throughout the year. You can find up-to-date information at the following website:# http://www.isdscotland.org/Health-Topics/ The performance measures in this section use national and local data sources to present the 2017/18 performance. Please note much of the data is taken from live systems and can be updated. Accordingly they may be revised in the future. The performance measures are shown under the six Domains of Quality derived from the Institute of Medicine; – Person Centred, Efficient, Safe, Equitable, Effective and Timely. In Tables 6-8 below we have presented performance data for a range of measures, and stated period the data to which it relates. We have then compared this information to what was presented in similar tables in the 2016/17 annual accounts. The final column (‘Status’) is an indication of how the measure has changed from last year’s position when you make this comparison.

Person-Centred and Efficient

The Board closely monitors the quality of the care it provides and the outcomes for its patients. When we compare its performance to other NHS Boards, NHS Lothian meets expectations on readmissions and length of stay. However we do need to continue our improvement in how we manage complaints. Table 6: Measures relating to Person-Centred and Efficient

Measure Period Latest Position Status (� = Met; ↑ = Not Met but Improving; � = Not Met and Not Improving)

Eff

icie

nt

Standardised Medical readmission rate per 1,000 admissions, within 7 days

To be within the limits of Hospital Scorecard national benchmarking tool

Jul-Sep 17 59.95 �

Standardised Medical readmission rate per 1,000 admissions, within 28 days

Jul-Sep 17 130.42 �

Standardised Surgical readmission rate per 1,000 admissions within 7 days

Jul-Sep 17 27.79 �

Standardised Surgical readmission rate per 1,000 admissions within 28 days

Jul-Sep 17 49.82 �

Average Medical Length of Stay – Adjusted Calendar Days

Jul-Sep 17 1.11 �

Average Surgical Length of Stay – Adjusted Calendar Days

Jul-Sep 17 0.96 �

No more than 4% Staff Sickness Absence Mar 18

4.93% ↑


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Measure Period Latest Position Status (� = Met; ↑ = Not Met but Improving; � = Not Met and Not Improving)

Pe

rso

n

Ce

ntr

ed

Complaints Stage 1 - Early, local resolution within 5 working days

Feb 18 56.0% N/A

Complaints Stage 2 - For the complex, serious investigation within 20 working days

Feb 18 56.5% N/A

Case Study – Chronic Obstructive Pulmonary Disease (COPD): Caring for the Carers

Over 17,000 people in Lothian have COPD, which is the second largest cause of emergency admissions to hospital. COPD patients benefit from pulmonary rehabilitation, which is when patients are advised how to manage exacerbations (the worsening of the patient’s systems from his or her usual stable state, and beyond normal day-to-day variations), cope with breathlessness, and keep active. The Board’s approach emphasises taking measures to prevent unnecessary admission to hospital, early discharge for those who have experienced an exacerbation, and promoting hospital-at-home care. Family carers perform complex and challenging tasks, and play a crucial role in the care of COPD patients. When families understand the value and impact of pulmonary rehabilitation, patients may be better supported to successfully self-manage. Understanding the needs of carers and addressing their own health needs, may sustain their ability to continue to provide care.

NHS Lothian’s Pulmonary Rehabilitation Service brought together a group of carers at an event where they could learn about COPD, and discuss common issues in a safe and open environment. A subsequent course was provided in October 2017 over two sessions, to include more information and more time for problem solving and reflection. 15 carers attended, where they met other carers, learned about the disease, how to cope and where to get help. The outcome was positive, with 80% finding the course content "very good," 20% rating it as “good” and 82% either "strongly agreeing" or "agreeing" that the session had improved their coping, their understanding and their confidence.


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Case Study – ‘Beads of Courage’ help strengthen and support children with chronic conditions Children with chronic conditions, who undergo regular procedures, can feel isolated from their peers and have to deal with life-changing diagnosis. In research, children are vulnerable and although they voluntary participate; the study requires a lot from them. Julie Baggott, from NHS Lothian’s Children’s Clinical Research Facility, devised a resilience-based intervention programme designed to support and strengthen children/families coping with serious illness. Julie took the “Beads of Courage” concept used in Oncology to develop a programme for children with chronic conditions. Children tell their unique healthcare story using colourful beads as meaningful symbols of courage that commemorate milestones they have achieved along their unique treatment path. They are rewarded with beads for acts of courage, procedures and events they go through, as well as for nights spent in hospital. “NHS Lothian’s core values include care and compassion and dignity and respect,” said Julie. “The Beads of Courage programme supports children and their families, promoting their dignity and respect. It allows professionals to see what children and their families have been through and consider if they require ‘one more’ blood test or procedure.” The results have been positive for patients, their families and staff:

• Staff feel they are able to give back to the children they work with

• Parents receive acknowledgement of their experience and the benefits that their child receives

• Siblings are acknowledged on this programme with their own set of special beads.

Commenting through social media on the story of a child nearing the end of her hospital inpatient stay – a girl with 1,010 beads of courage – a family member said: “I love that the beads motivate and reward her, but also that they document just how brave she is (as if we needed any more evidence of that!)”

Safe and Equitable The positive progress made last year in the management of Healthcare Associated Infections for clostridium difficile infections has been maintained although the management of staphylococcus aureus bacteraemia (including MRSA) remains a challenge. HSMR (hospital standardised mortality), falls with harm and antenatal booking continue to meet expectations nationally however performance on cardiac arrest rates in hospitals and on supporting those stopping smoking fall short of the desired level.


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Table 7: Measures relating to Safe and Equitable

Measure Period Latest Position

Status (� = Met; ↑ = Not Met but Improving; � = Not Met and Not Improving)

Safe

Median Rate of Cardiac Arrest to be no more than 0.95 per 1,000 discharges

Median to Mar 18

1.76 �

NHS Boards' rate of CDI (clostridium difficile infections) in patients aged 15 and over is 0.32 cases or less per 1,000 total occupied bed days.

Mar 18 0.24 �

NHS Boards' rate of SAB (staphylococcus aureus bacteraemia (including MRSA)) cases are 0.24 or less per 1,000 acute occupied bed days.

Mar 18 0.29 ↑

Hospital Standardised Mortality Ratio to be within limits of Hospital Scorecard national benchmarking tool as well as less than 1

Oct-Dec 17 0.84 �

Median Rate of Falls with harm per 1,000 occupied bed days to be no more than 0.31

Median to Mar 18

0.25 �

Equ

ita

ble

At least 80% of pregnant women in each Scottish Index of Multiple Deprivation quintile will have booked for antenatal care by the 12th week of gestation

Mar 18 92.4% �

Sustain and embed successful smoking quits, at 12 weeks post quit, in the 40% Scottish Index of Multiple Deprivation areas, with a target of 404 this quarter

Oct-Dec 17

172

�

Case Study – The Safety Gap: Improvements at the Interface The management of patient flow is fundamental to the smooth and efficient running of the NHS. The patient pathways need to be viewed from the beginning of the patient's journey in primary care to the patient returning home. Patient flow also needs to be viewed across all sites as a whole, in real time, to give a Lothian-wide system perspective. The Flow Centre is a centralised service to support the flow of patients across all adult acute sites in Lothian. Management brought together what were previously separate functions (Lothian Transport Hub and Bed Bureau), to form the Flow Centre, and co-located with the Lothian Unscheduled Care Service (LUCS) Hub. The Flow Centre works closely with GPs, the Scottish Ambulance Service and integration joint boards to create clear pathways for admission, and access to alternatives to admission. The aim is to ensure patients are seen in the right place, at the right time, by the right person. Patient safety is at the heart of the Flow Centre’s work. There is a robust safety and governance framework in place to ensure the safety of patients at the interface


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Case Study – The Safety Gap: Improvements at the Interface between primary and secondary care, and to support clinical decision-making. The Flow Centre aims to reduce harm/waste and system inefficiencies. Over the past year, its work has brought many benefits to patients and staff:

• Patients arrive at acute sites earlier in the day. They have access to senior decision-makers, reducing the risk of unnecessary hospital admission.

• The Flow Centre can book patients directly into rapid access clinics, and approximately 164 patients per month are referred to alternative services.

• 60% of patients are transported to hospital in a Flow Centre vehicle or a patient transport service ambulance. This saves 520 emergency ambulance days a year, with no delays.

• A Lothian-wide escalation policy has been agreed with sites to ensure patients are referred to the safest place

• There are 2,700 referrals a month from GPs via the Flow Centre, with more patients seen in right place.

Case Study – Improving the transition from child to adult services for adolescents with chronic diseases in general practice Adolescence is a vulnerable time for those with long term conditions. The transition to adult services involves a transfer of health responsibility from parents/carers to the young person. Compared to other age groups, adolescents have a higher risk of medical non-adherence, i.e. they are more likely to not take medication or follow medical advice exactly as prescribed by the healthcare professional. Clear and prompt communication between secondary care and the patient’s GP is crucial to achieve a smooth care transition for adolescent service users. To address this issue, NHS Lothian ran a quality improvement project that aimed to:

• develop a practice register of adolescents with a mental health condition

• record the percentage of adolescents with long term mental health conditions who successfully completed transition from child to adult services

• identify issues experienced by service users and clinicians to ensure a smooth care transition process.

The project’s long term aim is to develop a model for service transition. Mental health was chosen as the first long-term condition for identifying barriers and refining care


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Case Study – Improving the transition from child to adult services for adolescents with chronic diseases in general practice transition processes. This care transition model will be used to test care transition processes for other long-term conditions.

The project team identified and coded adolescents between 14-20 years with mental health conditions, using the GP Practice database. It established an initial coding protocol to identify adolescents who should be appropriately referred for adult mental health services. Adolescents due to begin this transition are invited to consult with a clinician with special interest in adolescent mental health. Adolescents, guardians and clinicians identify transition issues and create solutions to problems for immediate and future application. 53 adolescents with chronic mental health conditions were identified, 10 aged 18-20 years, with a robust review process put in place. From 10 service users, three adolescents (100% compliance with transition) successfully transitioned from Child and Adolescent Mental Health Services (‘CAMHS’) to adult mental health services. Seven were discharged from CAMHS at 18 years; four continued to consult their GP for ongoing mental health needs. Service users identified transition and compliance issues. Further process testing has started for reviewing asthma in adolescents and the follow-up process for successful transitions.

Case Study – Improving the quality of medicine reconciliation to reduce the risk of harm Medicines reconciliation reduces patient harm from medicines across the transitions of care. It ensures that patients are prescribed the correct medicines, at the correct doses appropriate for their current clinical presentation. A NHS Lothian quality improvement project aimed to improve the accuracy of the inpatient prescription chart, focusing on patients admitted from primary care to an acute hospital. The goal of the project was that 80% of patients admitted to the Acute Receiving Unit at the Western General Hospital would have their medicines reconciled to inform the accuracy of the inpatient prescription chart by November 2017. The objectives were to:

• describe the current medicines reconciliation process

• identify barriers to the process

• design and apply test of changes to the process

• analyse process and outcome measures for improvement.


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Case Study – Improving the quality of medicine reconciliation to reduce the risk of harm The project team followed five patients from the point of admission to transfer into an inpatient ward. A staff questionnaire was designed and circulated to obtain feedback about current medicines reconciliation processes. The team gathered data on process and outcome measures, and analysed this for 20 patients per month. The accuracy of prescription charts at the point of hospital admission (outcome measure) improved from 40% to 80% between March and November 2017. The sources used and the plan for each medication (process measures) improved from 30% to 60% during the same period. This project demonstrated the successful use of quality improvement methodology to reduce patient harm.

Effective and Timely

As highlighted earlier in the accounts and despite the best efforts of staff, patients are still waiting longer than they ought in NHS Lothian with the expected standards met in three of 13 measures considered. This is a reduction on the situation a year with both 31 day cancer standard and 4 hour unscheduled care standard now not being met. Progress in stroke reported last year has however continued and has met the national target level. Table 8: Measures relating to Effective and Timely

Measure Period Latest

Position Status (� = Met; ↑ = Not Met but Improving; � = Not Met and Not Improving)

Tim

ely

At least 95%, with an ambition of 98%, of unscheduled care patients to be admitted, treated or discharged within 4 hours

Mar 18 75.3% �

Sustain and embed alcohol brief interventions in 3 priority settings (primary care, A&E, antenatal) and broaden delivery in wider settings (at least 9,757 overall, 80% being in priority settings)

Year ending Mar 18

15,205 �

At least 90% of Child and Adolescent Mental Health Patients to be treated within 18 weeks of referral

Mar 18 58.6% ↑

At least 95% of patients diagnosed with cancer to be treated with 31 days

Mar 18 90.4% �

At least 95% of patients referred with suspicion with cancer to be treated with 62 days

Mar 18 85.9% �


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90 per cent of clients will wait no longer than 3 weeks from referral received to appropriate drug or alcohol treatment that supports their recovery.

Oct-Dec 17 77.4% �

100% of Inpatient and Daycases covered under the Treatment Time Guarantee to be seen in 12 weeks

Mar 18 76.1% �

At least 90% of patients to receive IVF within 12 months

Mar 18 100.0% �

At least 95% of Outpatients to be waiting no more than 12 weeks

Mar 18 66.2% �

At least 90% of Psychological Therapy patients to be treated within 18 Weeks

Mar 18 77.2% ↑

At least 90% of patients to be treated within 18 weeks of Referral

Mar 18 74.6% �

At least 80% of patients to receive the full Stroke Bundle of care

Feb 18 81.9% �

Eff

ective

To minimise delayed discharges over 3 days Mar 18 304 �

Within the Overview section of this Performance Report there is a discussion of the key risks, and this

covers issues which have a bearing on the above performance measures. While this will not be replicated here, some further information on some of the above measures is set out below.

(a) Emergency Access Standard The standard indicates 95% of individuals should wait no more than 4 hours from arrival to admission, discharge or transfer for Accident and Emergency treatment. The 4-hour emergency access standard is a barometer of whole system pressures, and is not a performance standard for emergency departments. The Overview section of this Performance Report discusses this whole-system perspective.


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Chart 4: Compliance with 4 Hour Emergency Access Standard

In 2017/18, NHS Lothian has seen a rise in the number of patients over 65 years old attending our emergency departments when comparing the periods of November 2016 to February 2017 and November 2017 to March 2018). There has been an increase in attendance on average of approximately 60 patients per week during this period. Further analysis shows that this is a particularly relevant factor for people who are over 75 years old. The increase in attendance at emergency departments does also lead to a rise in unscheduled hospital. admissions. On average of an additional 46 patients per week were admitted, again mainly those aged over 75 years old. This rise in presentations of this older age group is associated multiple co-morbidities. Patients with multi morbidities are less able to be cared for on an ambulatory or out-patient basis, resulting in a higher admission rate. (b) Child & Adolescent Mental Health Services

The standard is that at least 90% of young people are to start their treatment by specialist Child & Adolescent Mental Health Services within 18 weeks of referral. .


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Chart 5: CAMHS Performance

There has been an improvement in performance during 2017/18. During 2018-19, the service will continue to review and monitor the transformational measures outlined below to support waiting times recovery.

• Updated referral documentation has been distributed to all referrers including details of alternative community services and options to try before referral to the specialist CAMHS Service.

• An opt-in letter has been sent to all parents/carers of patients who are near the top of the waiting list to determine if treatment is still required, as symptoms may have resolved.

• Introduction of Patient Focussed Booking for Choice Assessment

• Group Triage following a successful quality improvement project which allowed the reduction in Choice Assessment Appointments

• A number of quality improvement projects, still in testing, to improve the patient pathway and reduce ‘Did Not Attend’ or ‘Could Not Attend’ first treatment

• Review of waiting lists to ensure that they are as accurate as possible, and observe the relevant waiting times guidance. NHS Lothian’s draft 2018-19 Annual Operational Plan outlines details of demand and capacity modelling undertaken and the additional staffing requirements to address referral demand. (c) Cancer

Cancer performance standards relate to the need to ensure 95% of people urgently referred with a suspicion of cancer and diagnosed with cancer are treated within 62 days of referral.


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Chart 6: Compliance with 62 Day Suspicion of Cancer Referral to Treatment

Cancer performance standards also require that 95% of all people diagnosed with cancer are treated within 31 days of decision to treat. Chart 7: Compliance with 31 Day Decision to Treat Standard

There are improvement plans in place with the aim to achieve both of these standards by the end of March 2019. For tumour groups currently achieving the cancer performance standards, we anticipate maintaining this performance. The measures being taken include:

• a review of cancer referral tracking resilience to support contingency planning during periods of staff leave and with a view to ensuring that cancer trackers are part of the cancer intelligence workforce


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• focus on capacity bottlenecks within the urology service and recruitment of a consultant experienced in undertaking robotic prostatectomy procedures

• review of the policy relating to escalation of cases requiring treatment

• introducing additional capacity in gynaecology to support patients whose pathways have been longer than anticipated

• identifying private sector capacity to support additional urology, colorectal and gastroenterology cancer treatments

• testing improvements in the melanoma pathway

• addressing gaps in capacity to address issues for patients with urgent suspicion of cancer identified through screening, (d) Treatment Time Guarantee (Inpatients and day cases)

The treatment time guarantee is set out in the Patient’s Rights (Scotland) Act 2011. It places a legal requirement on NHS Boards where once it has been agreed that a patient requires once planned inpatient and day case treatment has been agreed with the patient, then the patient should receive treatment within 12 weeks.

Chart 8 - Compliance with the Treatment Time Guarantee

NHS Lothian’s draft 2018-19 Annual Operational Plan outlines a number of options and trajectories to improve performance levels. Those options are based on different levels of investment. In addition to the measures set out in the Overview section of this performance report, initiatives are being taken forward to ensure maximum efficiency and productivity. This includes:

• quarterly meetings with service management teams to review performance and share good practice.

• workforce development – initiatives to improve staff morale, enhance training and development, and reduce the use of supplementary staffing.


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(e) Outpatients The standard is that 95% of patients should not wait longer than 12 weeks from the point of referral to their first outpatient appointment.

Chart 9: Compliance with Referral to First Outpatient Appointment

There is a long-standing significant gap between the demand for and the capacity for new outpatient appointments. Every Board in NHS Scotland has challenges with this standard, and as at 31 March 2018 the NHS Scotland performance was 75.1%. In April 2017, we anticipated there would be 40,056 patients waiting more than 12 weeks for a new outpatient appointment at the end of March 2018. The actual performance was 21,125 patients waiting over 12 weeks. This was achieved through a mixture of improvement actions, waiting list initiatives and, the purchase of an additional outpatient appointment capacity from the independent sector. We have set out in the Overview section of the Performance Report the key actions which have been taken. Our draft 2018-19 Annual Operational Plan outlines a number of options and trajectories to improve performance levels. Those options are based on different levels of investment. In the meantime, in addition to the actions referred to in the Overview section, a range of steps have been or are being taken which includes:

• reducing the number of individuals who do not attend appointments (DNA);

• triage of letters to advice only clinics to provide GPs and patients with advice;

• reducing demand associated with return appointments to create additional new appointment capacity;

• new outpatient wait lengths are now available on Ref Help and are refreshed on a monthly basis;

• collaborative test of change with NHS 24 to contact long waiting gastrointestinal patients using clinical algorithm

• keeping in touch programme with longest waiting patients, resulting in between 3.4% and 20% removals depending on specialty, as well as options to escalate patients as clinically indicated.

• introduction of primary care faecal calprotection testing, consultant triage and new Ref Help guidance has seen a sustained reduction in new gastrointestinal referrals of 400 patients per month

• Faecal Immunochemical Test (FiT) evaluation commences in 1 April 2018, with the aim to reduce number of gastrointestinal / endoscopy referrals


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(f) Psychological Therapies The standard requires that 90% of those patients requiring psychological therapy are to start treatment within 18 weeks of referral. Chart 10: Psychological Therapies Performance

There are service recovery plans in place for all psychological therapy adult services which focuses on:

• treatment for patients who have waited the longest

• increasing the access to group interventions

• monitoring and management of agreed activity with actual activity

• reducing the non-attendance of appointments through a programme of action to address the underlying causes, and the improvement of flow of patients through acute clinical services once stabilised and supported.

• increasing the uptake of computer-based cognitive based therapy (‘Mastermind’) for those with mild to moderate presentations of anxiety and depression Throughout the year there has been an improvement in access to psychological therapies for older adults and a reduction in the waiting times. The draft 2018/19 Annual Operational Plan includes proposals to continue with the improvement.

Case Study – REACHing out to proactively identify frailty

Frailty is associated with poorer outcomes following a ‘stressor’ event. The early identification of frailty, coupled with timely Comprehensive Geriatric Assessment, makes it more likely that patients will recover and return to their own homes following a stay in hospital. Rapid Elderly Assessment and Care in Hospital (REACH) specialist nurses provide proactive frailty screening for all patients aged over 65 years who are admitted to the Acute Medical Unit at St John’s Hospital. This screening is carried out within 24 hours of admission. The team use an adapted Health Improvement Scotland (HIS) frailty screening tool


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Case Study – REACHing out to proactively identify frailty

to assess frailty. The score may trigger a review of clinical and collateral history and ‘get up and go’ screening, with rapid physiotherapy and occupational therapy input. This enables patient-centred goal setting, timely assessment and proactive discharge planning. The REACH approach has evolved from one nurse to a team of two nurses, a physiotherapist and an occupational therapist, to enable further benefits and scalability. The screening programme aims to:

• identify and manage frailty on a timely basis.

• support the challenges associated with an ageing population.

• develop an enhanced role in unscheduled care to improve the patient journey, and enable partnership working between multiple agencies.

• nurture a positive patient and carer experience. The work has led to a variety of benefits for patients and staff, including:

• an increase in the number of patients over 65 years old who REACH have seen and assessed, initiating appropriate care and involvement of others.

• reducing the average length of stay in hospital. This has reduced the level of occupied bed days and lowered cost.


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2C – 2017/18 Financial Results

The Scottish Government requires NHS Boards to meet three financial targets in the year:

1. Revenue resource limit – a resource budget for ongoing operations; 2. Capital resource limit – a resource budget for new capital investment; and 3. Cash requirement – a financing requirement to fund the cash consequences of the ongoing operations

and the new capital investment. The first two limits have been split between core and non-core elements. This has been done to recognise how the Board is funded. In simple terms the Board’s day-to-day running costs are covered by ‘core’ funding. The Board also has to recognise other expenditure in its accounts which is determined by applying accounting standards, and the Scottish Government provides ‘non-core’ funding for this expenditure. Examples of ‘non-core’ expenditure are depreciation, other provisions, and impairment charges (where the value of an asset has been written down). The Board has operated within these limits in 2017/18 as summarised below:

Limit as

set by SGHSCD

Actual Outturn

Variance (Over)/Under

£’000 £’000 £’000

1 Core Revenue Resource Limit

1,512,516 1,512,237 279

Non-Core Revenue Resource Limit

91,141

91,141

0

2 Core Capital

Resource Limit 50,373 50,373 0

Non-Core Capital Resource Limit

23,657

23,657

0

3 Cash Requirement 1,635,042 1,635,042 0

Memorandum of In Year Outturn Brought forward surplus from previous financial year

339

Excess against in year total Revenue Resource Limit

60

Net Savings against the Revenue Resource Limit

279

The notes to the accounts provide further detail on the Board’s income and expenditure during the year.

Demand-led income and expenditure in respect of family health services (including dental, ophthalmic and pharmacy services) is not included in the Board’s Revenue Resource Limit. The net expenditure on family health services is deducted from the Statement of Consolidated Comprehensive Net Expenditure to arrive at the performance against the Board’s revenue resource limit. This is set out in the Resource Outturn Statement on page 73.


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The NHS Scotland Unified Board Accounts Manual 2017/18 requires certain disclosures to be made within this Performance Report, and these are provided below:

• The Board has a provision for bad debts of £3.615m at 31 March 2018 (31 March 2017 £2.75m). Further information is available at Note 9 to these accounts.

• The Board has a provision for clinical and medical negligence claims of £97.5m at 31 March 2018 (31 March 2017 £92.8m). Most of these provisions are recoverable under the NHS Clinical Negligence and Other Risks Insurance Scheme (CNORIS). Further information is available at Note 13 to these accounts.

The Scottish Government is committed to supporting business in the current economic climate by paying bills more quickly. The intention is to achieve payment of all undisputed invoices within 10 working days. The Board calculates this by comparing the date that payment was made, to the date that it received the invoice. In 2017/18 the average number of days the Board took to pay an invoice was 11 days (2016/17 – 11 days).

2017/18 2016/17

% of Invoices by Value, paid within 30 days 92% 94%

% of Invoices by Value, paid within 10 days 84% 85%

% of Invoices by Volume, paid within 30 days 93% 93%

% of Invoices by Volume, paid within 10 days 86% 84%

No payments were made under Late Payment of Commercial Debts (interest) Act 1998 in 2017/18 (2016/17 - Nil).

2D – Social Matters Our Services NHS Lothian’s vision and mission are social matters, and all aspects of NHS Lothian’s activities have a bearing on social matters. Our public health and health promotion work is based on the latest evidence and learning about how to influence health and wellbeing, in partnership with other community planning bodies. Our services seek to do the right thing, at the right time, for each and every patient, family member, and community we work with. We use a comprehensive patient experience system to collect feedback on how we are doing in this regard: http://www.nhslothian.scot.nhs.uk/YourRights/PatientExperienceAndFeedback/Pages/default.aspx Equalities and Human Rights We have used 2017/18 as a period to reflect on our approach and performance in 2013 - 17. You can find more information on this here: http://www.nhslothian.scot.nhs.uk/YourRights/EqualityDiversity/Pages/OutcomesMainstreamingReport2017.aspx We will publish a new set of Equality Outcomes in 2018. These Outcomes will be informed by the learning from the previous years, engagement with local communities, and the outcomes that our partner organisations (local authorities, Police Scotland, Fire and Rescue Service, colleges and universities, etc.) have chosen to focus on. Employment NHS Lothian has over 20,000 whole-time equivalent employees, which of itself has significant economic and social impacts. We seek to continuously improve the experience of our staff at work, and we have established a Staff Engagement and Experience Programme Board to oversee our approach to this.


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We aim to provide careers rather than jobs, while supporting young people to earn, learn and progress. NHS Lothian has a dedicated website for careers, which includes information for young people, academies and apprenticeships, work experience & placement, and information for those people considering a career change. http://careers.nhslothian.scot.nhs.uk/Pages/default.aspx Sustainable workforce planning and development requires us to identify and cultivate new talent pools, develop an early career strategy, and create attractive youth employment opportunities. We recognise that young people require tailored support to move into employment, or enter into an education programme that will allow them to access the career development pathways within healthcare. Our pathways offer information on entry routes, education levels and opportunity for new and existing staff, and have been hugely beneficial. These pathways are used to support career choices in schools and colleges, assist new staff in developing and planning career aspiration and support existing staff and managers to plan personal development. This work has enhanced NHS Lothian’s culture, in that it supports an ethos of life-long learning, personal and professional development and unlocks the potential for career progression. In 2015 NHS Lothian had 12 Modern Apprentices and this has now grown to 64, all of whom are still in employment in NHS Lothian. Below are comments from some of our Modern Apprentices: “I enjoy learning best. I have a good purpose and feel good about myself again. It’s made me look forward to coming to work, I was uninspired before. I like being in the NHS, it gives me great job security. When I finish I want to stay here and keep working” “I didn’t know what I wanted to do but I knew I wanted to be in healthcare. This has let me experience a new challenge. I learn something new every day and now I hope to qualify as a biomedical scientist” Going forward:

• 2018 is Year of the Young Person, and a key action in our delivery plan is to establish a young person’s network to support the aspiration of this national programme and support some of the key themes for young people, including: participation, education, health & wellbeing and equality and discrimination.

• We recognise that applying for a job and taking part in a recruitment process can be intimidating and stressful to some people. We have tested new approaches to recruitment, including recruiting for potential, where the candidates are not required to have previously secured qualifications. The recruitment approach use values-based and group assessment interview techniques to get the best out of young people. We will now embed this into our approach to recruitment.

• We have planned a cohort approach to apprenticeship recruitment for 2018. This will involve three recruitment rounds, each for 20 vacancies, which will aligned to the needs of the service, e.g. the re-provision of hospital services, new treatment centres.

• The cost of travelling to work can be a challenge. We have secured funding in 2018 for 10 days bus travel for apprentices, which is available for use during their induction period to ease this challenge. We are also working with third sector partners to explore the potential for supporting young people with clothing grants when they are in a role which does not require a uniform.

Promoting Good Business Conduct One of NHS Lothian’s Values is Openness, Honesty and Responsibility. Several years ago the NHS Board published its Anti-Bribery Statement, which amongst other things contains the contact details for the Board’s Fraud Liaison Officer, the Public Standards Commissioner, and for employees, details on whistleblowing arrangements. You can see the full Anti-Bribery Statement here: http://www.nhslothian.scot.nhs.uk/OurOrganisation/KeyDocuments/Pages/Anti-Bribery-Statement.aspx The Anti-Bribery Statement is supported in practice by the Code of Conduct for Board Members, procedures and guidance to embed the NHS Standards of Business Conduct, as well as the professional standards of conduct


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which health professionals each have to observe as condition of their registration with their professional body, e.g. the General Medical Council’s Good Medical Practice (2013): https://www.gmc-uk.org/guidance/good_medical_practice/maintaining_trust.asp

2E - Sustainability and Environmental Reporting The Climate Change (Scotland) Act 2009 set outs measures adopted by the Scottish Government to reduce emissions in Scotland by at least 80% by 2050. In 2015, an Order was introduced requiring all designated Major Players (of which Lothian NHS Board is one) to submit an annual report to the Sustainable Scotland Network detailing compliance with the climate change duties imposed by the Act. The information returned by the Board is compiled into a national analysis report, published annually and superseding the prior requirement for public bodies to publish individual sustainability reports.

Further information on the Act, along with copies of prior year national reports, can be found at the following resource:

http://www.keepscotlandbeautiful.org/sustainability-climate-change/sustainable-scotland-network/climate-change-reporting/

27 June 2018 …………………….…………… Interim Chief Executive and Accountable Officer


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SECTION B: THE ACCOUNTABILITY REPORT

B1 Corporate Governance Report

(A) The Directors’ Report

Date of Issue The Board presents this report and the audited accounts for the year ended 31 March 2018. The Board approved these accounts on 27 June 2018 for submission to the Scottish Government.

Appointment of the Board’s External Auditors The Public Finance and Accountability (Scotland) Act 2000 places personal responsibility on the Auditor General for Scotland to decide who is to undertake the audit of each health body in Scotland. The Auditor General appointed Scott-Moncrieff to under the audit of Lothian NHS Board for the five-year period from 2016/17 to 2020/21. The general duties of the auditors of health bodies, including their statutory duties, are set out in the Code of Audit Practice issued by Audit Scotland and approved by the Auditor General.

Remuneration for Non-Audit Work The remuneration of the auditors is disclosed in note 3 to the accounts. During 2017/18 the Board’s external auditors received fees amounting to £7,200 (including VAT) in relation to non-audit work. This non-audit work was the audit of the abstract of receipts and payments of patients’ private funds.

Disclosure of Information to Auditors The Board members who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Board’s auditors are unaware; and each Board member has taken all the steps that he / she ought reasonably to have taken as a Board member to make himself / herself aware of any relevant audit information and to establish that the Board’s auditors are aware of that information.

Board Membership The Cabinet Secretary (Health & Wellbeing) appoints all NHS Board members. The Board is made up of executive and non-executive members. The members are collectively responsible for the governance of the organisation, and the Board is accountable to the Scottish Government. The Board discharges its governance role through regular Board meetings and the work of its committees. You can find the Board’s Standing Orders and other key governance policies on the Board’s website at: http://www.nhslothian.scot.nhs.uk/OurOrganisation/KeyDocuments/Standing Orders As at 31 March 2018 the Board had 5 executive Board members and 17 non-executive Board members. The Board’s non-executive members include nominees from key stakeholders, and lay members who have applied through a public appointment process. Members are selected on the basis of their position as stakeholders or the particular expertise which enables them to contribute to the decision making process at a strategic level. You can find out more about the public appointment process at: http://www.appointed-for-scotland.org/ Table 1 below sets out who held the position of Board members at any time during 2017/18.


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Table 1: Individuals who were Board Members at any time during the period from 1 April 2017 to

31 March 2018

Name Position

Brian Houston Non-executive, Chair

Tim Davison Chief Executive

Professor Alex McMahon Director of Nursing, Midwifery & Allied Health Professionals

Susan Goldsmith Director of Finance

Professor Alison McCallum Director of Public Health & Health Policy

Dr Tracey Gillies Medical Director

Shulah Allan MBE Non-executive, Vice-Chair (until 31 December 2017) Michael Ash Non-executive

Kay Blair Non-executive (until 31 January 2018)

Cllr Donald Grant Non-executive (East Lothian Council) (until 30 April 2017)

Cllr Fiona O’Donnell Non-executive (East Lothian Council) (from 7 July 2017)

Cllr Ricky Henderson Non-executive (City of Edinburgh Council) Cllr Henderson was not a member from 1 May 2017 to 6 July 2017. He rejoined the Board on 7 July 2017 and remained a member until 19 April 2018.

Professor Moira Whyte Non-executive (University of Edinburgh)

Cllr Catherine Johnstone Non-executive (Midlothian Council) (until 30 April 2017)

Cllr Derek Milligan Non-executive (Midlothian Council) (from 23 June 2017)

Peter Johnston Non-executive (until 31 May 2017)

Alex Joyce Non-executive (Employee Director)

Julie McDowell Non-executive (until 31 May 2017)

Peter Murray Non-executive

Fiona Ireland Non-executive (Area Clinical Forum)

Alison Mitchell Non-executive

Martin Hill Non-executive, vice-Chair from 1 January 2018

Cllr Harry Cartmill Non-executive (West Lothian Council) (until 30 April 2017)

Cllr John McGinty Non-executive (West Lothian Council) (from 23 June 2017)

Dr Richard Williams Non-executive (GP Representative) (until 28 February 2018)

John Oates Non-executive (until 22 February 2018)

Carolyn Hirst Non-executive

Lynsay Williams Non-executive (until 31 March 2018)

Angus McCann Non-executive (from 1 September 2017)

Professor Tracy Humphrey Non-executive (from 1 September 2017)

Martin Connor Non-executive (from 1 September 2017)

Bill McQueen CBE Non-executive (from 1 February 2018)

Scottish Ministers appoint local authority councillors onto the NHS Board on the condition that they continue to serve as a councillor and maintain the nomination and support of the local authority. Their nomination is only for the life of the Council, which ends when there is an election. The Scottish local authority elections were held on 4 May 2017. Consequently Councillors Ricky Henderson, Catherine Johnstone and Harry Cartmill ceased being their local authority’s nomination to the Board after midnight on 3 May 2017. Councillor Ian Campbell joined the Board on 20 April 2018, replacing Councillor Ricky Henderson as the City of Edinburgh Council’s nominated member.


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The Statement of the Health Board Members’ Responsibilities in respect of the Accounts

Under the National Health Service (Scotland) Act 1978, the Health Board is required to prepare accounts in accordance with the directions of Scottish Ministers which require that those accounts give a true and fair view of the state of affairs of the Health Board as at 31 March 2018 and of its operating costs for the year then ended. In preparing these accounts the directors are required to:

• Apply on a consistent basis the accounting policies and standards approved for the NHS Scotland by Scottish Ministers.

• Make judgements and estimates that are reasonable and prudent.

• State where applicable accounting standards, as set out in the Financial Reporting Manual (FReM), have not been followed where the effect of the departure is material.

• Prepare the accounts on the going concern basis unless it is inappropriate to presume that the Board will continue to operate.

The Health Board members are responsible for ensuring that proper accounting records are maintained which disclose with reasonable accuracy at any time the financial position of the Board and enable them to ensure that the accounts comply with the National Health Service (Scotland) Act 1978 and the requirements of Scottish Ministers. They are also responsible for safeguarding the assets of the Board and hence taking reasonable steps for the prevention of fraud and other irregularities. The NHS Board members confirm they have discharged the above responsibilities during the financial year and in preparing the accounts.

Board Members’ and Senior Managers’ Interests

All Board members are subject to the Ethical Standards in Public Life (Scotland) Act 2002. The members are required to maintain their entry on the Board’s Register of Interests, and this can be found on the Board’s website at: http://www.nhslothian.scot.nhs.uk/OurOrganisation/BoardCommittees/LothianNHSBoard/BoardMembers The Board approves the appointment of its members to its committees. During 2017/18 a new webpage was developed, the Board Members’ Handbook, which provides further information on the system of governance, including the terms of reference of its committees. You can find this by clicking the link below: http://www.nhslothian.scot.nhs.uk/OurOrganisation/ Lothian NHS Board/ Board Members Handbook Some members are also nominated by the Board as voting members of the integration joint boards, and some of the Board’s employees are non-voting members. The integration joint boards and their members are also subject to the Ethical Standards in Public Life (Scotland) Act 2002, and each will maintain its own Register of Interests. There is a page on the NHS Lothian website which provides information on health & social care integration and a link to the websites of the integration joint boards. http://www.nhslothian.scot.nhs.uk/Community/Pages/default.aspx All Board members are also trustees of charitable funds that the Board holds. The Trustees govern the charitable funds distinctly from the Board’s exchequer funds. Lothian Health Board Endowment Fund (commonly known as the Edinburgh & Lothian Health Foundation) is a charity registered with the Office of the Scottish Charity Regulator under number SCO07342. The Board is required to consolidate the financial statements of Lothian Health Board Endowment Fund within the Board’s Annual Accounts. Note 25 details how these consolidated Financial Statements have been calculated.


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Note 24 of these accounts contain details of any interests of Board members and other senior staff and senior managers in contracts or potential contracts with the Health Board as required by IAS 24.

Board Members’ Third Party Indemnity Provisions During 2017/18 the Board was not required to pay for directors & officer’s liability insurance for its members as it is now included under the NHS Clinical Negligence and Other Risks Insurance Scheme (CNORIS).

Personal data related incidents reported to the Information Commissioner During 2017/18, the Board (two incidents), an independent GP practice (one incident) and individuals (three incidents) reported six incidents to the Information Commissioner’s Office for review. The Information Commissioner’s Office has ruled that the Board has acted appropriately in relation to all of these incidents and therefore they have been closed down.

Public Services Reform (Scotland) Act 2010 This Act requires the Board to publish information on expenditure and certain other matters as soon as is reasonably practicable after the end of each financial year. The relevant information is disclosed under the Board’s website at: http://www.nhslothian.scot.nhs.uk/OurOrganisation/KeyDocuments/Pages/Financial.aspx


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(B)The Statement of the Chief Executive’s Responsibilities as the Accountable Officer

of the Health Board

Under Section 15 of the Public Finance and Accountability (Scotland) Act, 2000, the Principal Accountable Officer (PAO) of the Scottish Government has appointed me as the Accountable Officer of the Board.

This designation carries with it responsibility for:

• the propriety and regularity of financial transactions under my control

• the economical, efficient and effective use of resources placed at the Board’s disposal; and

• safeguarding the assets of the Board.

In preparing the accounts I am required to comply with the requirements of the Government’s Financial Reporting Manual (FReM) and in particular to:

• observe the accounts direction issued by Scottish Ministers including the relevant accounting and disclosure requirements and apply suitable accounting policies on a consistent basis

• make judgements and estimates on a reasonable basis

• state whether applicable accounting standards as set out in the FReM have been followed and disclose and explain any material departures; and

• prepare the accounts on a going concern basis.

I confirm that the Annual Report and Accounts as a whole are fair, balanced and reasonable. I am responsible for ensuring proper records are maintained and that the accounts are prepared under the principles and in the format directed by Scottish Ministers. To the best of my knowledge and belief, I have properly discharged my responsibilities as Accountable Officer as intimated in the Departmental Accountable Officers’ letter to me of 28 April 2012.


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(C) The Governance Statement

As Accountable Officer, I have responsibility for maintaining an adequate and effective system of internal control that supports the achievement of Lothian NHS Board (“the Board”) policies and promotes achievement of the Board’s aims and objectives, including those set by Scottish Ministers. I am also responsible for safeguarding the public funds and assets assigned to the Board. I am also responsible for safeguarding the public funds and assets assigned to the Board. In accordance with IAS 27 – Separate Financial Statements, these financial statements consolidate the Lothian Health Board Endowment Fund (SC007342). This statement includes any relevant disclosure in respect of these Endowment Accounts.

Purpose of System of Internal Control

The system of internal control is based on an ongoing process designed to identify and mitigate the principal risks facing the organisation. The system aims to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically, and is designed to manage rather than eliminate the risk of failure to achieve the Board’s policies, aims and objectives. As such it can only provide reasonable and not absolute assurance. The process is consistent with the Scottish Public Finance Manual (“SPFM”) and supplementary NHS guidance, and has been in place for the year up to the date of the approval of the annual report and accounts. The Scottish Ministers issues the SPFM to provide guidance to the Scottish Government and other relevant bodies on the proper handling and reporting of public funds, and it can be accessed via the following link: http://www.gov.scot/Topics/Government/Finance/spfm/Intro

Governance Framework and the Process to Review its Adequacy & Effectiveness The Performance Report describes the organisation, the Board’s approach to setting strategic direction and corporate objectives, and sets out what has been achieved in the year. It also explains how the governance arrangements for health and social care functions have been fundamentally revised as a result of the implementation of the Public Bodies (Joint Working) (Scotland) Act 2014, and the delegation of functions to integration joint boards. Integration joint boards are separate legal entities with their own systems of governance, and they produce their own annual accounts as well as a performance report. The NHS Board received the integration joint boards’ 2016/17 performance reports on 4 October 2017. The Directors’ Report provides information on the Board’s membership as well as links to further information on its committees and how the Board operates. The Audit & Risk Committee has governance oversight of system of risk management system, and that committee receives a report on risk management at every meeting. Other committees have responsibility for oversight of specific categories of risk which relate to their remit. The work of all committees includes oversight of compliance with the law and regulatory activity which is relevant to their remits. As Accountable Officer I am responsible for reviewing the effectiveness of the system of internal control. Throughout 2017/18 the Board has continued to develop its system of corporate governance, which has included:

• The Board’s membership has been refreshed, with new members replacing those who have left. The Board has developed an induction programme for new members, and published a Board Members’ Handbook on its website.

• The Board has revised the terms of reference of its Reference Committee, its Information Governance Sub-Committee, and the Lothian Capital Investment Group.

• The Board has revised its Standing Financial Instructions, and reviewed its Standing Orders (with a revised version to be approved in early 2018/19).

• The Board has put in place systems to meet the requirements of the Community Empowerment (Scotland) Act 2015, and published information on its website to inform community-controlled bodies of these.


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• Building on work undertaken in previous years on improving its approach to policies and procedures, the Healthcare Governance Committee has overseen the establishment of a new Policy Approval Group.

• The Board started using standard levels of assurance within the reports to the Board and its committees in 2016/17. This has been embedded during 2017/18, and the standard levels are now used within the risk management system, internal audit reports, the Quality & Performance Improvement report, the committees’ annual reports and the directors’ certificates of assurance. This common language throughout the system of governance improves the quality of reports, the level of assurance provided, and consequently the Board members’ understanding of key issues. My direct reports have provided me with their certificates of assurance which have been informed by reviews of their systems of internal control, as required by the Scottish Public Finance Manual. The Board’s committees also support my role as Accountable Officer, and the annual reports of the Audit & Risk Committee, Staff Governance Committee, Healthcare Governance Committee (and its Information Governance Sub-Committee), Acute Hospitals Committee and the Finance & Resources Committee have informed this Governance Statement.

• Work has started to review the system of governance for services for children and young people.

• Work has started to review the function of the Board’s Acute Hospitals Committee. The Scottish Government issues circulars and we have a process to distribute those to the relevant directors. Some of this material is pertinent to the design of the system of corporate governance and is fed into the process of continuous review. The complete suite of circulars can be found on the NHS Scotland website. As part of the 2017/18 external audit, the Board’s external auditor documented the key controls to ensure that the Board promptly identifies and implements relevant circulars, and subsequently reported that this work did not highlight any concerns. The Board routinely receives the minutes of committee meetings, and as a Board member, I am routinely informed of the output of their activities. The Board also routinely receives the minutes of integration joint board meetings for information. The chairs of Board committees meet regularly with the Board Chairman, and this provides an opportunity for the chairs to discuss any governance matters of common interest. The Scottish Workforce and Governance Committee defined the role and remit of a NHS Board Whistleblowing Champion and in previous years the Board has appointed one of its non-executive members to that role, and reviewed its Whistleblowing Policy. During 2017/18 we have embedded the Whistleblowing Policy in practice, and delivered a programme of training to managers throughout the organisation. Additionally there is an NHS Scotland Confidential Alert Line, which an independent whistleblowing charity runs, to provide a safe space for NHS employees to raise concerns. Management have raised awareness of the Confidential Alert Line through an internal communications exercise, which included placing posters on staff notice boards throughout NHS Lothian. The Board’s Staff Governance Committee oversees the arrangements for whistleblowing, and has agreed that it has moderate assurance on the systems and processes which are in place. All of the Board’s human resources (“HR”) policies are available on our HR Online intranet site, which provides access to all human resources policies and procedures, together with associated flow charts, tools & templates, and Frequently Asked Questions. HR Online also has an HR Enquiry facility where a query regarding any HR issue can be emailed and a response will be provided. The Board routinely uses the internal bulletin, the Team Brief, to communicate when any new HR policy has been agreed. Following a meeting with the Scottish Public Services Ombudsman (“SPSO”) in August 2016, the Board developed a local action plan to take forward a number of improvements, and appointed a non-executive Board member as its “Complaints Champion”. A new model complaints handling procedure for NHS Scotland was established on 1 April 2017. The Complaints Champion has chaired a Complaints Improvement Project Board which provided oversight to 4 sub-projects:

1. NHS Lothian complaints handling procedure 2. SPSO complaints processes 3. Support to NHS Lothian from the SPSO Learning & Improvement Unit 4. Learning from Complaints, Concerns, Comments and Compliments

The Nurse Director is the executive lead for complaints and the wider patient feedback agenda. He chairs a Patient Experience Programme Board which during 2017/18 has taken action to support the effective


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implementation of the new complaints handling procedure. The Healthcare Governance Committee has patient experience as part of its remit and has received regular reports on it. The Committee has agreed that it has moderate assurance on the systems in place, and the score for the associated risk on the Board’s corporate risk register has been lowered. Management have been developing a strategic and tactical approach towards long term financial strategy throughout 2017/18, and both the Board and its Finance & Resources Committee have engaged in this process. The Finance & Resource Committee received a report on 21 March 2018 which summarised the position at that point, which includes:

• A four-tiered approach to achieve financial sustainability, which recognises that there are things the Board itself can progress, however other actions have to be taken forward regionally and nationally.

• A system of programme management with three key steps (1. Identifying Opportunities, 2. Programme Management, 3. Assurance & Monitoring) has to be put in place for each tier.

• A key action is to map the work that is already underway at a national, regional and local level. The proposed approach to Assurance & Monitoring is based on 3 key principles:

1. Every project should have robust metrics aligned to their aims and objectives and mirroring the anticipated benefits, in line with the quality management approach.

2. These metrics should map onto the internal performance management dashboards that currently exist to allow alignment of work against the Board’s corporate objectives.

3. These, in turn, should map onto the Board level reporting and external performance reports to allow a read across of the relative contribution of programmes and projects to the organisation’s overarching performance management framework.

The Finance & Resources Committee agreed that the report provided limited assurance that there is currently a reliable framework in place to deliver future financial sustainability. The Committee agreed that this subject should be a standing agenda item for future meetings, and provided feedback to management to inform its further development. The Board members participated in two exercises at the start of 2016 to inform the review of the collective performance of the Board;

1. NHS Scotland Board Diagnostic Tool 2015/16, and 2. The Board members completed an iMatter questionnaire to produce a team report. You can find out

more about iMatter at: http://www.staffgovernance.scot.nhs.uk/monitoring-employee-experience/imatter/

The Board has agreed a forward schedule of Board development sessions for 2018, which aim to give greater focus on the development of the Board and how it functions. The Board’s committees review their own effectiveness annually as part of the process of preparing their annual reports which inform this Governance Statement. The Board’s Chairman conducts the appraisal of non-executive Board members and my own appraisal. I conduct the appraisal of my direct reports among who are four executive Board members. My review is also informed by the work of the Board’s internal auditors and external auditors. I routinely attend the Audit & Risk Committee where all audit reports are considered, and my Corporate Management Team meeting also receives all internal audit reports. The Chief Internal Auditor has provided the following audit opinion in her 2017/18 annual report: ‘Overall, Internal Audit’s work indicates that NHS Lothian has a framework of controls in place that provides reasonable assurance regarding the effective and efficient achievement of the organisation’s objectives and the management of key risks. However we would highlight particular areas of risk around NHS Lothian’s unscheduled care arrangements as identified in our report presented to the NHS Lothian Board in December 2017. Particular risks related to compliance with national guidance and NHS Lothian’s SOP, recording and reporting of accurate data, and certain organisational culture considerations. Subsequent to our report NHS Lothian management has implemented a revised SOP and taken a number of actions to address the control deficiencies identified. A further independent


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review was undertaken on behalf of the Scottish Government which is due to report in 2018/19 and Management has reiterated their commitment to take forward the additional actions in this report, particularly in respect of governance, culture and working practices. Sufficient arrangements are in place, in the areas Internal Audit has reviewed, to promote value for money and secure regularity and propriety in the administration and operation of NHS Lothian controls.’

Risk Assessment The standard format for Board and committee reports requires consideration of the relevant risks. Board reports are available on our website at: http://www.nhslothian.scot.nhs.uk/OurOrganisation/BoardCommittees/LothianNHSBoard/BoardPapers/Pages/default.aspx Executive managers are responsible for managing risk. As the Accountable Officer, I am required to ensure that risks are identified, that their significance is assessed and that appropriate remedial action is taken to reduce risk exposure, or eliminate it where possible. I have delegated the executive responsibility for the system of risk management to the Medical Director who is supported by the Associate Director for Quality Improvement & Safety.

The Board published a Risk Management Policy and Operational Procedure in June 2012. The Board also has an Adverse Event Policy and Procedure which the Healthcare Governance Committee approved in March 2014. The Risk Management Policy sets out the responsibility for managing risk at different levels in the organisation, and is clear that all employees have a role to play in managing risk in the organisation and that risk should be managed at the most devolved point in the organisation. The Board has a risk management system with modules on risk management and adverse event management, which supports an organisation-wide approach to risk management. There are also structures and systems in place to manage key risks on a topic basis, e.g. health & safety, patient safety, business continuity management, emergency planning and infection control.

The Audit & Risk Committee received the 2017/18 Risk Management Annual Report on 18 June 2018. During 2017-18 there has been a range of actions taken forward to embed the Adverse Event Policy and Procedure and the Risk Management Policy and Procedure, set within the context of enhancing NHS Lothian’s safety culture to support improvement. Based on learning and feedback from the service, both policies have been reviewed and the Board will consider a revised policy for its approval in early 2018/19.

Adverse Events

A robust system of reporting and reviewing adverse events supports organisational learning and improvement. The Board has had a system in place for many years and it has led to improvements. For example, the falls reduction programme (as part of the Scottish Patient Safety Programme) has delivered a sustained reduction in the number of falls with harm; 34% since 2010. The pressure ulcer programme has reduced the incidence of pressure ulcers in the adult acute hospitals by 22%. The key issue for improving the management of significant adverse events is the timely completion of reviews. The Quality Improvement Support Team continues to support management teams and teams within the services across the organisation to implement processes to address the backlog of reviews. Common challenges are the complexity and volume of adverse events, the time required to involve families, the availability of post mortem and toxicology reports, and the capacity of staff, particularly medical staff. 55% of the backlog relates to events in mental health services and substance misuse. 70% of unexplained deaths are in these areas. The Executive Nurse Director and the senior management team of Royal Edinburgh Hospital & Associated Services are developing an improvement plan, and the following actions have already been agreed:

• Increasing capacity within the service to support the improvement process for managing significant adverse events.

• Reviewing the current processes for reviewing adverse events, including how we determine the level of review that is required, and who should be involved.


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• Testing revised processes using robust quality improvement methodology to ensure sustainable and reliable implementation.

Throughout the year arrangements have been put in place so that the Board may effectively discharge the Duty of Candour, a legal duty which took effect on 1 April 2018. The duty applies to a subset of adverse events where a defined level of harm has occurred and the event was not expected as part of the care or service delivery plan. The duty will be carried out as part of the wider adverse event policy and procedure.

The Medical Director has convened a multidisciplinary panel of senior leaders from across the organisation to increase the visibility and leadership towards improving how the organisation manages adverse events. The panel will be a reference group for the duty of candour, and will undertake quality assurance for complex reviews relating to significant adverse events. The first meeting of the panel was in May 2018.

The Healthcare Governance Committee agreed in May 2018 that it had moderate assurance on the systems in place for the management and learning from adverse events across NHS Lothian, including the duty of candour.

Risk Management

There has been a considerable body of work undertaken in 2017/18 to develop the system of risk management:

� Management and the relevant Board committees have reviewed all of the risks on the corporate risk register.

� The Audit & Risk Committee convened a workshop in November 2017 to consider how the effective the system of risk management is in supporting the delivery of corporate objectives. This identified four fundamental strategic risks to success which are not explicitly captured on the corporate risk register. This work informed the Board workshop in May 2018, and will inform development work in 2018/19. The four risks are: 1. Realising new models of care. 2. Ability to improve and innovate. 3. Establishing positive working relationships. 4. Active public and patient engagement.

� There has been continuous review of the risk registers held by the acute services management team, the

four health & social care partnerships, and the four integration joint boards. This has strengthened risk management and decision-making across health & social care.

� Facilities management is the area with the highest number of adverse events with serious harm to staff.

Management have used data analysis and quality improvement methodology to determine where the improvement work needs to be focussed. This work will continue to be developed in 2018/19.

Disclosures Review of the disclosures made in the 2016/17 Governance Statement Information Governance The Board continues to hold equipment that cannot be encrypted without breaching the Medicines and Healthcare Products Regulatory Agency licence, and some out of date equipment that cannot be encrypted. There will always be some equipment that cannot be encrypted but the organisation has no alternative to use. The Board’s Caldicott Guardian has a process which requires departments to notify her of any exceptional use of unencrypted equipment. Local departments are required to take appropriate action to minimise any risk. The Board’s standard for transfers of sensitive personal data between departments is that they be carried out securely on IT systems, and measures have been put in place for this to be observed across the organisation. Some fax machines are retained for business continuity reasons. Some departments have had to continue using fax machines to receive sensitive personal data from external organisations. There are planned IT developments,


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both local and national, which will eventually eliminate the use of fax and hard copy. In the meantime the Caldicott Guardian has a procedure to ensure any exceptions to the standard are clearly documented and risk assessed, with local departments responsible for managing the residual risk. The Information Commissioner’s Office (“ICO”) conducted a consensual audit in February 2016 after reflection on several historic incidents within NHS Lothian relating to personal data. The audit focussed on three areas; training and awareness, records management (manual and electronic) and subject access requests. The ICO published its report on 27 May 2016 which made an assessment of “limited assurance” and issued recommendations in each of these areas. Management implemented an action plan to attend to the recommendations and the issues in the report. The ICO provided a follow-up report in January 2017 which was a positive report recognising a considerable amount of work and improvement. Some of the actions are not complete as they require changes to systems which the Board does not directly control. The Information Governance Sub-Committee will oversee the remaining issues from the original report.

A range of novel diagnostic tests is emerging. These rely on scarce expertise to undertake and require the secure transfer of identifiable or potentially identifiable data to university laboratories or small scientific enterprises (often health service or university spin offs) in the UK and overseas. Individual exceptions to standard practice are put in place to ensure that essential clinical need for care is met. The Board’s Caldicott Guardian reviews the evidence, tissue and information governance. Management implement agreed data sharing and processing agreements and standard operating procedures for transfer of data and clinical material.

In 2016/17 a third party contractor had a data breach which in turn compromised the security of data relating to some of the Board’s employees. The Information Commissioner’s Office has closed down this incident, and there have been no notifications of any data breaches arising from it. Management have considered what further data protection measures are appropriate for this supplier. During 2017/18 management established a General Data Protection Regulation short life working group. The group has developed and implemented a robust action plan, which was informed by the Information Commissioner’s “12 Steps to take now” guidance. The working group updates the action plan as new requirements emerge. There is an accountability principle within the new law which requires data controllers to demonstrate that they comply with the law, and accordingly management have progressed a review of the NHS Lothian Information Asset Register for all services. An information risk assessment for each area follows the review of information assets. The Information Governance Sub-Committee is overseeing this work. In the 2016/17 statement, it was reported that the facilities directorate was going to review its compliance with information governance requirements. The Facilities Directorate has in 2017/18 reviewed its entries of the NHS Lothian Information Asset Register. It has completed the review by adding a further seven information assets to the register.

Healthcare Governance The Healthcare Governance Committee approved the NHS Lothian Pharmaceutical Care Services Plan 2017 on 12 September 2017, and the plan is available on the Board’s website at: http://www.nhslothian.scot.nhs.uk/Services/Pharmacies/CommunityPharmacy/Pages/PharmaceuticalCare.aspx The Board has successfully sustained its performance for Clostridium Difficile (C-diff) infection, with the rate being less than the Local Delivery Plan standard. The Board has improved its performance with Staphylococcus Bacteraemia (SAB) infections (compared to 2016/17) however the rate is still higher than Local Delivery Plan standard. In 2016/17 an external case note review of the Lothian Perinatal Community Service was completed. This indicated poor and inconsistent compliance with record-keeping standards. In 2017/18 management reviewed all of the case notes for current patients and brought them to the required standard. There are now weekly audits in place to maintain the standard. Additionally the notes have all been scanned, and the service is working “paper-lite”. The Performance Report contains a summary of the measures taken in response to the risks associated with general practice sustainability.


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In 2016/17 the Care Inspectorate and Healthcare Improvement Scotland (HIS) carried out a joint inspection of older people’s services in health and social work across Edinburgh. The findings of the report highlighted a number of specific areas for improvement related around delivery of key processes including the number of assessments and adult protection referrals. There were 17 recommendations in the report and several key issues that need improvement. In response to this, the Edinburgh Health & Social Care Partnership allocated a lead officer to each of the recommendations, and measures put in place to co-ordinate and monitor progress. The partnership established ‘critical challenge panels’ in February 2018 involving senior managers and lead officers, to support problem-solving, and to get assurance that management were identifying and acting on collaborative opportunities across the recommendations. This work is still underway and a summary of the progress to date is below:

• the Partnership has developed a Partnership’s Statement of Intent and communicated this to staff and partners in November 17;

• the Partnership has completed outline strategic commissioning plans for older people, learning disabilities, mental health and primary care. Additionally the Partnership has set up reference groups to oversee the development of each of the plans;

• the Partnership has developed exit strategies for the closure of Liberton hospital and Oaklands care home, and has developed an intermediate rehabilitative care model to replace Gylemuir care home;

• the Partnership is reviewing the accessibility of all of its services.

• the Partnership will be rolling out a training programme for all staff involved in assessment, and developing its guidance and tools to support the implementation of self-directed support and personalisation of care;

• there is potential for a development of a research-based care development in conjunction with representatives from Edinburgh’s universities, voluntary sector providers, the NHS Board, the City of Edinburgh Council and the Scottish Government.

The aim of this activity is that it will address the backlog of assessments, and reduce the likelihood of the waits increasing in the future. Financial Governance NHS Scotland Counter Fraud Services have concluded their investigation of a major case involving a former employee, that covered offences carried out in previous years. NHS Scotland Counter Fraud Services have now handed over this case to the Crown Office and Procurator Fiscal Service, who are currently considering it. The Board did operate within its financial targets in 2017/18. During 2017/18 management have been developing its strategic approach towards achieving financial sustainability, and further information on this is included in the Performance Report. Capital Investment On 15 November 2017 the Finance & Resources Committee received a progress report on bridging projects for oncology services. Management had explored the options available in light of the Scottish Government advising that the initial agreement was not going to be fully funded, and the receipt of a significant charitable donation for the haematology service. The Committee agreed to approve the development of four projects, now known as the Oncology Enabling Projects. The Committee also approved the submission of a £15.2m proposal to the Scottish Government’s Capital Investment Group. However the Committee did recognise that it is now assumed that the Edinburgh Cancer Centre will not be opened until 2030. The Committee noted that while the projects will make improvements, they will not deliver full compliance with Healthcare Environment Inspectorate standards, and the service will remain compromised until the Edinburgh Cancer Centre is operational. The Chief Executive of NHS Scotland responded on 26 March 2018 to confirm that he had accepted Scottish Government’s Capital Investment Group’s recommendation, and invited the Board to submit an outline business case. The Board submitted a revised initial agreement for the redesign of eye services and the re-provision o the Princess Alexandra Eye Pavilion to the Scottish Government’s Capital Investment Group on 12 December 2017 to seek approval to proceed with the development of an outline business case. The Chief Executive of NHS Scotland responded on 8 February 2018 to confirm that he had accepted Scottish Government’s Capital Investment Group’s recommendation, and invited the Board to submit an outline business case. He also advised that as part of developing the outline business case, particular focus should be directed on the needs of both NHS


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Fife and NHS Borders, and that a regional view is formed which takes account of property issues, workforce and the Board’s aspirations around creating a centre of excellence. Performance The Performance Report includes updates on the measures taken to improve aspects of performance which were referred to in the 2016/17 Governance Statement, namely delayed discharges and access to our services. Disclosures for 2017/18 The Board has established a quality management system and there is a need to secure a recurring funding stream for it, as it has the potential to impact on the Board’s objectives. Management will address this as part of the development of a 5-year quality plan. In order to deliver the aims of the Board’s quality strategy and information strategy, it is essential to have assurance on the quality of our data. Management are working to develop reliable data warehousing arrangements to achieve this goal, as part of the implementation of the Board’s information strategy. The Scottish Government published DL (2015) 19: Healthcare Associated Infection and Antimicrobial Resistance Policy Requirements on 14 July 2015. This letter includes the following: ‘HPS are currently scoping an approach for both Colorectal and Vascular Surgery SSI surveillance. It is the expectation that NHS Boards will participate in this surveillance as per the agreed protocol.’ Health Protection Scotland published the 7th edition of the Surgical Site Infection Surveillance Protocol on 30 March 2017. Management have elected to delay the implementation of surgical site surveillance for colorectal and vascular patients until 2018/19, as there is a need to recruit additional registered nurses in order effectively implement the requirements. There is an increasing level of risk of the Board not being able to deliver upon its various performance measures. The Performance Report describes the key issues and risks that the Board faces, namely:

• demography, inequalities and ill health;

• multimorbidity;

• health service demand;

• tighter finances.

In particular this impacts on the delivery of the treatment time guarantee and the outpatient waiting times, both in terms of the number of patients waiting longer than 12 weeks and the increasing length of those waits. Management are taking measures to make the best use of existing resources, and have embedded a clinical risk assessment framework to effectively direct resources to the areas of highest risk.

There has been a reduction in the longest waits within the Children & Adolescent Mental Health Services. The Healthcare Governance Committee had agreed that this was a priority, and there are appropriate clinical governance arrangements in place to oversee children’s access to services. However the arrangements are not as well developed for adult mental health services due to a range of factors, including structural changes to community services. The Healthcare Governance Committee has accepted limited assurance for both services as the current plans have not lead to improvements in access. The current state raises concerns with respect to negative impact on experience and outcome of care. The committee will continue to monitor this subject through the risk management system, and specific reports and presentations on this subject. The Board also monitors the performance through the Quality & Performance Improvement report. As part of the response to the concerns raised under the Board’s whisteblowing arrangements on the emergency access standard (see Statement from the Chief Executive), the Board’s internal auditors identified opportunities to improve the effectiveness of the Access & Governance Committee. Management have taken action to make improvements, and providing reports to the Audit & Risk Committee so as to provide assurance. The Healthcare Governance Committee received moderate assurance with respect to there being greater oversight of delayed discharges and enhanced joint working. Although plans have been presented to the committee throughout 2017/18, the committee currently has limited assurance as to whether they will mitigate the risks, and the committee is concerned with the negative impact on patient experience and the outcome of care. The Committee Chair has escalated this matter to the Board. The committee continues to monitor this subject, and the Board also monitors it through the Quality & Performance Improvement report. The Performance Report in these accounts provides further information on the actions being taken on delayed discharges.


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With regard to the waiting times to access drug & alcohol services, the Healthcare Governance Committee has limited assurance on the adequacy of plans to improve performance in this area (with the exception of services in Midlothian). The committee will continue to monitor this subject.

The Healthcare Governance Committee agreed that it had significant assurance that there had been a comprehensive review of how the organisation currently manages deteriorating patients in acute hospitals. However the committee agreed that it has only limited assurance as to the adequacy of the resultant improvement plan, on the grounds that it has not been tested at scale. The committee will monitor the development of the improvement plan, and continue to monitor the subject through the risk management system, the Quality & Performance Improvement report, and other specific reports.

The paediatric inpatient facility at St John’s Hospital has not operated as a 24 hour/ 7 days per week inpatient ward since July 2017 due to staff shortages. The unit operates as a 7-day assessment unit, with a patient pathway which takes 2-3 children per day to the Royal Hospital for Sick Children for inpatient treatment. , The Committee has taken assurance that the Paediatric Programme Board is monitoring staffing levels frequently, and has taken all the actions available to recruit the staff which would allow a 24 hour/ 7 days per week inpatient facility to operate in a safe and sustainable manner.

There have been changes to the way that some public health initiatives have been funded which create uncertainty for budget holders. These changes include reduced funding, late confirmation of funding for some initiatives, changes to the way that funds are distributed, and increased use of non-recurring funding. The cumulative impact of this affects resource management, workforce planning and sustainable delivery. Management will work with the Scottish Government to attend to these issues.

The Health & Safety Executive inspected the laboratories at the Royal Infirmary of Edinburgh, following an adverse event. This led to the Health & Safety Executive serving an improvement notice. Management completed all of the identified actions with the exception of ‘human factors’ risk assessments being put in place. However based on the detailed response to the improvement notice, the Health & Safety Executive has lifted the improvement notice. Management have processes in place to complete the remaining actions in June 2018. The Care Inspectorate inspected Belhaven Nursing Home and reported that senior management’s directions were not being implemented. The management team immediately developed an action plan and addressed the issues. There has been a delay in the delivery of the new Royal Hospital for Children and Young People and the Department of Clinical Neurosciences. It is likely that this matter will be addressed in a separate commercial agreement with the contractors to provide certainty on particular aspects of the clinical specification, which to date have been in dispute. The Finance & Resources Committee has approved the development of a longer term strategic approach to achieving financial sustainability. The Performance Report contains an outline of this approach. The Board has to address bottom two tiers (‘Financial Recovery Plans’, ‘Improvement’) internally. At the moment management do not have assurance that the various aspects of improvement work which are already underway are evidently delivering towards the goal of financial sustainability. Management are developing a programme management approach to attend to this assurance need.


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REMUNERATION AND STAFF REPORT

1. Board Members’ and Senior Employees’ Remuneration

Information disclosed in this report relates to the remuneration of Board Members and senior managers who directly report to the Chief Executive. Other disclosures in these accounts provide details of the interests of Board Members and senior managers, and information about related party transactions.

Board Members and senior managers are remunerated in accordance with approved national pay rates. All posts at this level are subject to rigorous job evaluation arrangements and the pay scales applied reflect the outcomes of these processes. All extant policy guidance issued by Scottish Government Health & Social Care Directorate (SGHSCD) has been appropriately applied and agreed by the Remuneration Committee. Determination of individual salary placement on appointment is guided by the terms of circulars Health Department Letter (HDL) (2006)23 and HDL (2006)59 as amended by subsequent directives issued by SGHSCD.

All senior manager posts have been evaluated using the HAY methodology through the National Evaluation Committee. NHS Lothian Executive Board Members are appointed and graded within the new Executive Cohort in accordance with HDL (2006)23. Other senior managers, other than those in transitional grades as determined by NHS Management Executive Letter (MEL) (2000)25, are appointed and graded to a new Senior Manager cohort in compliance with HDL (2006)59. Managers within transitional grades have been re-evaluated to grades within Agenda for Change pay-scales.

In accordance with the Financial Reporting Manual (FReM) and the Companies Act, 2013-14 was the first year that publication of the “pension benefits” was required. This calculation aims to bring public bodies in line with other industries in disclosing an assessed cumulative pension benefit for a standard 20 year period, which is the estimated life span following retirement.

Details of Board Members’ remuneration are disclosed in notes 2a – 2e of the remuneration report and have been subject to audit.


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REMUNERATION REPORT (AUDITED) 2(a). Board Members’ and Senior Employees’ Remuneration – 2017/18

Gross Salary (Bands

of £5,000)

Benefits in kind (£’000)

Total Earnings in Year

(Bands of £5,000)

Pension Benefits (£’000)

Total Remuneration

(Bands of £5,000)

Remuneration of: Executive Members

Mr Tim Davison, Chief Executive note 1

180-185 - 180-185 14.5 195-200

Mrs Susan Goldsmith, Director of Finance 140-145 - 140-145 37.5 175-180

Miss Tracey Gillies, Medical Director (From 01/02/2017) note 2

160-165 - 160-165 80.5 240-245

Professor Alison McCallum, Director of Public Health and Health Policy 130-135 - 130-135 43.6 175-180

Professor Alex McMahon, Nurse Director (From 20/06/2017) 105-110 - 105-110 30 135-140

Non Executive Members

Mr Brian Houston, Chairman 45-50 - 45-50 - 45-50

Cllr Donald Grant (Until 30/04/2017) note 3

0-5 - 0-5 - 0-5

Cllr Catherine Johnstone (Until 30/04/2017)note 4

0-5 - 0-5 - 0-5

Cll Harry Cartmil (Until 30/04/2017)lNote 5

0-5 - 0-5 - 0-5

Cllr Ricky Henderson, City of Edinburgh Council (From 07/07/17)Note 6

5-10 - 5-10 - 5-10

Cllr Derek Milligan (From 23/06/17)note 7

5-10 - 5-10 - 5-10

Cllr John McGinty (From 23/06/17)note 8

5-10 - 5-10 - 5-10

Cllr Fiona O’Donnell (From 07/07/17)note 9

5-10 - 5-10 - 5-10

Mr Peter Johnston (Until 31/05/17)note 10

0-5 - 0-5 - 0-5

Mrs Julie McDowell (Until 31/05/17)note 11

0-5 - 0-5 - 0-5

Professor Tracy Humphrey (From 01/09/17)note 12

0-5 - 0-5 - 0-5

Dr Richard Williams (retired 28/02/18) note 13

135-140 - 135-140 - 135-140

Mrs Shulah Allan, Public Partnership Forum Chair and Vice Chair (retired 31/12/17) 10-15

- 10-15 -

10-15

Mr Michael Ash

15-20 - 15-20 - 15-20

Mrs Alison Mitchell 15-20 - 15-20 - 15-20

Mr John Oates (Resigned 22/02/18)note14

10-15 - 10-15 - 10-15

Mrs Lynsay Williams(Resigned 31/03/18) 5-10 - 5-10 - 5-10

Mr Peter Murraynote 15

15-20 - 15-20 - 15-20

Mr Martin Hill note 16

15-20 - 15-20 - 15-20

Mrs Carolyn Hirstnote 17

15-20 - 15-20 - 15-20

Mrs Kay Blair (Until 23/01/18) 10-15 - 10-15 - 10-15

Professor Moira Whyte, The University of Edinburgh note 18

5-10 - 5-10 - 5-10

Ms Fiona Ireland 75-80 - 75-80 11.1 90-95

Mr Alex Joyce, Employee Director note 19

50-55 - 50-55 - 50-55

Mr Martin Connor (From 01/09/17)note 20

5-10 - 5-10 - 5-10

Mr Angus McCann (From 01/09/17)note 21

0-5 - 0-5 - 0-5

Mr Bill McQueen (From 01/02/18)note 22

0-5 - 0-5 - 0-5

Other Senior Employees

Mrs Jacqui Simpson, Director of Regional Planning 90-95 - 90-95 1.9 90-95

Mr Jim Crombie, Deputy Chief Executive (From 26/01/2017)

140-145 4 145-150 3 150-155

Mr James Forrest, Chief Officer, West Lothian Integration Joint Board note 23

50-55 2.2 50-55 27.7 80-85

Mr David Small, Chief Officer, East Lothian Integration Joint Board note 24

50-55 - 50-55 21.9 70-75

Mrs Eibhlin McHugh , Midlothian Integration Joint Board (Until 30/10/17 )note 25

25-30 - 25-30 - 25-30

Mr Allister Short, Chief Officer, Midlothian Integration Joint Board (From 01/11/17)

note 26 60-65

- 60-65 27.3

90-95

Mr Rob McCulloch-Graham, Edinburgh Integration Joint Board (Until 01/05/2017)

note 27 40-45

- 40-45 -

40-45

Mrs Michelle Miller, Interim Chief Officer, Edinburgh Integration Joint Board (01/05/2017- 02/03/18)

note 28 45-50

- 45-50 -

45-50

Mrs Judith Proctor (From 02/03/2018) 0-5 - 0-5 - 0-5

Mr Simon Watson, Chief Quality Officer 145-150 - 145-150 39.7 185-190

6.2 338.7

There were no Performance related bonuses payable for 2017-18.


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Notes to Remuneration Table 2(a) 1. Tim Davison exited the pension scheme on 31/03/2014 and the Pension Benefits figures above are in line

with this change. 2. The Pension Benefit figure for Tracey Gillies includes contributions from her previous employer. 3. The annualised salary figure for Donald Grant would be £8,251. 4. The annualised salary figure for Catherine Johnstone would be £8,251. 5. The annualised salary figure for Harry Cartmill would be £8,251. 6. The annualised salary figure for Ricky Henderson would be £8,251. 7. The annualised salary figure for Derek Milligan would be £8,251. 8. The annualised salary figure for John McGinty would be £8,251. 9. The annualised salary figure for Fiona O'Donnell would be £8,251. 10. The annualised salary figure for Peter Johnston would be £8,251. 11. The annualised salary figure for Julie McDowell would be £8,251. 12. The annualised salary figure for Tracy Humphrey would be £8,251. 13. Richard retired as a board member 28/02/18 but continued his clinical work. Richard William’s salary

includes £120,744.18 for non-board duties. 14. John Oate’s remuneration includes £5,353.32 as Vice Chair of the Midlothian IJB. 15. Peter Murray’s remuneration includes £8,251 as Vice Chair of East Lothian IJB. 16. Martin Hill’s remuneration includes £8,251 as Vice Chair of West Lothian IJB. 17.Carolyn Hirst’s remuneration includes £8,251 as vice chair of Edinburgh IJB. 18.Moira Whyte is an employee of The University of Edinburgh and her Non Executive Allowance is charged

to NHS Lothian. 19. The salary figure for Alex Joyce includes £42,430.66 for non board duties. 20. The annualised salary figure for Martin Connor would be £8,251. 21. The annualised salary figure for Angus McCann would be £8,251. 22. The annualised salary figure for Bill McQueen would be £8,251. 23. 50% of the costs for James Forrest are charged to West Lothian Council. This salary is in relation to their

role as Chief Officer of the IJB and is disclosed IJB accounts. 24. 50% of the costs for David Small are charged to East Lothian Council. This salary is in relation to their

role as Chief Officer of the IJB and is disclosed in the IJB accounts. 25. Eibhlin McHugh is an employee of Midlothian Council and 50% of her salary is charged to NHS Lothian.

This salary is in relation to their role as Chief Officer of the IJB and is disclosed in the IJB accounts 26. 50% of the costs for Allister Shorts Chief Officer role are charged to Midlothian Council. Mr Shorts full

salary includes £ 45,936.26 for his substantive role. This salary is in relation to their role as Chief Officer of the IJB and is disclosed IJB accounts.

27. Rob McCulloch-Graham is an employee of The City of Edinburgh Council and 50% of his salary is charged to NHS Lothian. This salary is in relation to their role as Chief Officer of the IJB and is disclosed in the IJB accounts.

28. Michelle Millar is an employee of The City of Edinburgh Council and 50% of her salary is charged to NHS Lothian. This salary is in relation to their role as Chief Officer of the IJB and is disclosed in the IJB accounts.


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REMUNERATION REPORT

2(b). Board Members’ and Senior Employees’ Remuneration – 2016/17

Gross Salary (Bands

of £5,000)

Benefits in kind (£’000)

Total Earnings in Year

(Bands of £5,000)

Pension Benefits (£’000)

Total Remuneration

(Bands of £5,000)

Remuneration of: Executive Members


175-180 - 175-180 48.8 225-230

Mrs Susan Goldsmith, Director of Finance 135-140 - 135-140 16 150-155

Dr David Farquharson, Medical Director (Until 31/03/2017) note 2

200-205 - 200-205 16 220-225


25-30

- 25-30 102.1 125-130

Professor Alison McCallum, Director of Public Health and Health Policy

120-125 - 120-125 22.6 145-150

Professor Alex McMahon, Nurse Director (From 20/06/2016) note 4

100-105 - 100-105 23 125-130


Mr Brian Houston, Chairman 40-45 - 40-45 - 40-45

Cllr Donald Grant, East Lothian Council 5-10 - 5-10 - 5-10

Cllr Ricky Henderson, City of Edinburgh Council 5-10 - 5-10 - 5-10

Cllr Catherine Johnston, Midlothian Council 5-10 - 5-10 - 5-10

Cllr Harry Cartmill, West Lothian Council (From 01/06/2016)note 5 5-10 - 5-10 - 5-10

Mr Peter Johnston note 6 15-20 - 15-20 - 15-20

Mrs Julie McDowell (until 31/05/17) note 7 25-30 - 25-30 - 25-30

Dr Richard Williams note 8

130-135 - 130-135 54.6 185-190

Mrs Shulah Allan, Public Partnership Forum Chair and Vice Chair 15-20 - 15-20 - 15-20

Mr Michael Ash note 9 15-20 - 15-20 - 15-20

Mrs Alison Mitchell 15-20 - 15-20 - 15-20

Mr John Oates 5-10 - 5-10 - 5-10

Mrs Lynsay Williams 5-10 - 5-10 - 5-10

Mr Peter Murray 5-10 - 5-10 - 5-10

Mr Martin Hill note 10 10-15 - 10-15 - 10-15

Mrs Carolyn Hirst 5-10 - 5-10 - 5-10

Mrs Kay Blair 15-20 - 15-20 - 15-20

Professor Moira Whyte, The University of Edinburgh note 11

5-10 - 5-10 - 5-10

Ms Fiona Ireland (From 01/09/2016) note 12

0-5 - 0-5 - 0-5

Mr Alex Joyce, Employee Director note 13

50-55 - 50-55 8 55-60

Cllr Frank Toner, West Lothian Council (Until 24/05/2016) note 14 0-5 - 0-5 - 0-5

Mr George Walker (Until 31/01/2017) note 15 20-25 - 20-25 - 20-25

Mrs Alison Meiklejohn, Chair of Lothian Area Clinical Forum (until 31/08/2016)

note 16 60-65 - 60-65 8.1 65-70

Other Senior Employees

Mr Jim Crombie, Deputy Chief Executive (From 26/01/2017) note 17 135-140 4 135-140 37.9 180-185

Simon Watson, Chief Quality Officer (From 04/04/2016) 135-140 - 135-140 179 315-320

Mr James Forrest, Chief Officer, West Lothian Integration Joint Board

note 18 45-50 1.1 50-55 7.3 55-60

Mr David Small, Chief Officer, East Lothian Integration Joint Board note 19

50-55 - 50-55 18.2 65-70

Eibhlin McHugh, Chief Officer, Midlothian Integration Joint Board note 20

75-80 - 75-80 - 75-80

Rob McCulloch-Graham, Chief Officer, Edinburgh Integration Joint Board

note 21

50-55 - 50-55 - 50-55

Mrs Janis Butler, Interim Director of Human Resources 95-100 - 95-100 73.5 165-170

5.1 587.4

There were no Performance related bonus payable for 2016-17.


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Notes to Remuneration Tables 2(b)

1. Tim Davison exited the pension scheme on 31/03/2014 and the Pension Benefits figures above are in

line with this change. 2. David Farquharson exited the pension scheme on 31/03/2012 and the Pension Benefits figures

above are in line with this change. 3. The Pension Benefit figure for Tracey Gillies includes contributions from her previous employer. Her

annualised salary figure would be £160,904.04. 4. The salary figure for Alex McMahon relates to his position as acting Nurse Director until 20/06/2016

and substantive post thereafter. 5. The annualised salary figure for Harry Cartmill would be £8,169. 6. Peter Johnston received £8,169 as Vice Chair of the Midlothian IJB. 7. Julie McDowell's remuneration includes £1,940.72 as Vice Chair of West Lothian IJB until 22/06/2016

and £8,008 as arrears of pay for her role as Vice Chair of the West Lothian IJB. The annualised salary for the IJB duties would be £8,169.

8. Richard William’s salary includes £125,524.06 for non-board duties. 9. Michael Ash's remuneration includes £1,869 as Vice Chair of the East Lothian IJB. The annualised

salary figure for the IJB position would be £8,169. 10. Martin Hill's remuneration includes £6,308.28 as Vice Chair of the West Lothian IJB from 23/06/2016.

The annualised salary figure for this position would be £8,169. 11. Moira Whyte is an employee of The University of Edinburgh and her Non Executive Allowance is

charged to NHS Lothian. 12. Fiona Ireland has withheld the consent to disclose the salary and pension contributions for her non-

board duties. The annualised salary figure for her non-executive position would be £8,169. 13. The salary figure for Alex Joyce includes £41,898.75 for non board duties. 14. The annualised salary figure for Frank Toner would be £8,169. 15. George Walker's remuneration includes £6,807.50 as Chair of the Edinburgh IJB until 31/01/2017.

The annualised salary for all his positions would be £24,507. 16. The salary figure for Alison Meiklejohn includes £58,217.04 for non-board duties. 17. The salary figure for Jim Crombie includes the salaries as Chief Officer until 10/07/2016, Acting Chief

Executive until 25/01/2017 and Deputy Chief Executive from 26/01/2017. 18. The above cost is the 50% NHS Lothian’s share of the salary, the other 50% for James Forrest are

charged to West Lothian Council. This salary is in relation to their role as Chief Officer of the IJB and is disclosed IJB accounts.

19. The above cost is the 50% NHS Lothian’s share of the salary, the other 50% of the costs for David Small are charged to East Lothian Council. This salary is in relation to their role as Chief Officer of the IJB and is disclosed IJB accounts.

20. The above cost is the 50% NHS Lothian’s share of the salary, which is charged to us by Midlothian Council as Eibhlin McHugh is an employee of Midlothian Council. This salary is in relation to their role as Chief Officer of the IJB and is disclosed IJB accounts.

21. The above cost is the 50% NHS Lothian’s share of the salary, which is charged to us by The City of Edinburgh Council as Rob McCulloch-Graham is an employee of The City of Edinburgh Council. This salary is in relation to their role as Chief Officer of the IJB and is disclosed IJB accounts.


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2(c) Cash Equivalent Transfer Value (CETV) of deferred pension rights 2017/2018

Total accrued

pension at age 60 at 31

March (Bands of

£5,000)

Real increase in pension

at age 60

(Bands of £2,500)

Total accrued lump sum at age 60 at 31

March (Bands of

£5,000)

Real increase in lump sum

at age 60

(Bands of £2,500)

Cash Equivalent

Transfer Value (CETV) at 31 March 2018

£’000

Cash Equivalent


£’000

Real increase in CETV in

year £’000

Pension Values: Executive Members


75-80 0-2.5 230-235 0-2.5 1,614 1,672 58

Mrs Susan Goldsmith, Director of Finance note 2

45-50 0-2.5 135-140 5-7.5 748 799 47


55-60 2.5-5 145-150 2.5-5 967 1,067 100

Professor Alison McCallum, Director of Public Health and Health policy

45-50 2.5-5 145-150 7.5-10 800 869 51

Alex McMahon, Nurse Director (From 20/06/2016) 15-20 0-2.5 55-60 2.5-5 343 384 41

Pension Values: Non Executive Members

Dr Richard Williams note 4

55-60 0-2.5 155-160 - 1,347 1,322 -

Mr Alex Joyce

20-25 0-2.5 60-65 0-2.5 464 479 11

Ms Fiona Ireland 0-5 0-2.5 0-5 2.5-5 10 29 9

Pension Values: Other Senior Employees

Mrs Jacqui Simpson 25-30 0-2.5 80-85 0-2.5 446 469 8

Mr Allister Short 10-15 2.5-5 25-30 0-2.5 202 234 32

Mr Jim Crombie, Deputy Chief Executive (From 26/01/2017) 45-50 0-2.5 135-140 2.5-5 757 795 17

Mr James Forrest, Chief Officer, West Lothian Integration Joint Board 55-60 0-2.5 165-170 2.5-5 923 974 36

Mr David Small, Chief Officer, East Lothian Integration Joint Board 10-15 0-2.5 30-35 2.5-5 164 191 12

Mr Simon Watson, Chief Quality Officer (From 04/04/2016) 35-40 2.5-5 85-90 0-2.5 516 563 47

The real discount rate used to evaluate CETV has been as advised by the UK Government Actuaries Department. Unless also subject to an employment contract with the Board, non executive members have no deferred pension rights under the NHS Superannuation Scheme for Scotland. Such members are therefore not included in the schedule of CETV transfer values above.


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Notes to Pension Table 2(c) 1. Tim Davison has exited the NHS Pension scheme so no employee or employer contributions were paid in the

period. 2. Susan Goldsmith has exited the NHS Pension Scheme provided by SPPA after the first 2 months of the

financial year, so no employee or employer contributions were paid in the periods after. 3. Pension Contributions and Real Increases for Tracey Gillies included contributions from her previous employer. 4. Pension Contributions for Richard Williams relate to his substantive post from which he retired 28/02/18. The

final salary benefits are therefore calculated using a lower basic salary in 17/18, and as a result will be less than the previous year.


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2(d) Cash Equivalent Transfer Value (CETV) of deferred pension rights 2016/17

Total accrued pension at

age 60 at 31 March

(Bands of £5,000)

Real increase in pension

at age 60

(Bands of £2,500)

Total accrued lump sum at age 60 at 31

March (Bands of

£5,000)

Real increase in lump sum

at age 60

(Bands of £2,500)

Cash Equivalent


£’000

Cash Equivalent


£’000

Real increase in CETV in

year £’000

Pension Values: Executive Members


70-75 0-2.5 220-225 5-7.5 1,497 1,580 84

Mrs Susan Goldsmith, Director of Finance 40-45 0-2.5 125-130 2.5-5 888 947 39

Dr David Farquharson, Medical Director (Until 31/03/2017) note 2

110-115 0-2.5 335-340 5-7.5 2,422 2,417 -


50-55 2.5-5 135-140 5-7.5 808 901 94

Professor Alison McCallum, Director of Public Health and Health policy

45-50 0-2.5 135-140 5-7.5 947 1,012 47

Alex McMahon, Nurse Director (From 20/06/2016) 15-20 0-2.5 50-55 2.5-5 294 333 25

Pension Values: Non Executive Members

Dr Richard Williams note 4 + 5

60-65 2.5-5 180-185 7.5-10 - - -

Mr Alex Joyce note 4

20-25 0-2.5 60-65 0-2.5 427 450 19

Mrs Alison Meiklejohn (until 31/08/2016) note 4

25-30 0-2.5 85-90 0-2.5 562 592 23

Pension Values: Other Senior Employees

Mr Jim Crombie, Deputy Chief Executive (From 26/01/2017) 40-45 2.5-5 125-130 7.5-10 810 884 54

Mrs Janis Butler, Interim Director of Human Resources 35-40 2.5-5 95-100 5-7.5 508 572 64

Mr James Forrest, Chief Officer, West Lothian Integration Joint Board 50-55 0-2.5 155-160 0-2.5 1,090 1,137 33

Mr David Small, Chief Officer, East Lothian Integration Joint Board 40-45 0-2.5 120-125 5-7.5 810 871 47

Mr Simon Watson, Chief Quality Officer (From 04/04/2016) 30-35 7.5-10 85-90 20-22.5 358 499 141

The real discount rate used to evaluate CETV has been as advised by the UK Government Actuaries Department. Unless also subject to an employment contract with the Board, non executive members have no deferred pension rights under the NHS Superannuation Scheme for Scotland. Such members are therefore not included in the schedule of CETV transfer values above.


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Notes to Pension Table 2(d)

1. Tim Davison exited the pension scheme on 31/03/2014 and the figures above are as per the prior year.

2. David Farquharson exited the pension scheme on 31/03/2012 and the figures above are as per the prior year.

3. Pension Contributions and Real Increases for Tracey Gillies include contributions from her previous employer.

4. Pension Contributions for Richard Williams, Alex Joyce and Alison Meklejohn relate to their substantive posts.

5. SPPA cannot provide CETV calculations for Richard Williams because he has reached the age limit for transfers.

6. Fiona Ireland has withheld the consent to disclose the pension contributions for her non-board duties.

7. Ricky Henderson and Donald Grant had been erroneously enrolled on the pension scheme. Their position has been rectified during the year and for this reason they are no longer disclosed.


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2(e). Additional disclosure in respect of Hutton Review on Fair Pay in the Public Sector (Audited) The Hutton Review reported its recommendations on disclosure of public sector pay in March 2011. The additional disclosure in respect of the highest earning executive member’s remuneration is set out below.

2017/18 2016/17

Range of Staff Remuneration (Bands of £5,000)

5-10 to 220-225 5-10 to 220-225

Highest Earning Director Total Remuneration Band (£5,000)

180-185 200-205

Median Total Remuneration (£) £26,335 £25,628

Ratio of Highest Earning Board Member to Median

6.92 7.90

The ratio decrease from 2016/17 to 2017/18 is due to the highest earning director leaving the Board, had the highest earning remuneration remained with the Board the ratio would have been 7.69.

3. Remuneration Committee The remit of the Board’s Remuneration Committee is to review the performance management and pay arrangements for the Chief Executive, executive directors and senior managers within the Board. Committee Membership: Brian Houston (Chair) Mr Michael Ash Mr Alex Joyce Mrs Julie McDowell (until 31/05/17) Mrs Lynsay Williams Mrs Alison Mitchell (from 21/06/17) During 2017/18 the Remuneration Committee met 5 times – 11 April; 18 July; 17 October; 12 December and 20 February. 4. Senior Managers’ Remuneration The Board’s policy on senior managers’ remuneration is in line with MEL (2000)25 and subsequent guidance, with particular reference to HDL (2006)23 and HDL (2006)59. The Board operates an appraisal system for all staff where personal development plans and objectives are agreed. Performance is assessed at half-yearly and at annual appraisals. Appraisals of Executive Directors are done by the Chief Executive. Appraisal of the Chief Executive is carried out by the Chairman. Outstanding Performance Awards are robustly reviewed and approved by the Remuneration Committee. The Committee also approves the individual objectives and assessment of those objectives of the Executive Directors within the Board.


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STAFF REPORT 1a) HIGHER PAID EMPLOYEES’ REMUNERATION

Other employees, not being directors or senior employees, whose remuneration fell within the following ranges:

Clinical Staff Other Staff 2018

Number 2017

Number 2018

Number 2017

Number

£50,001 to £60,000 530 559 65 62 £60,001 to £70,000 258 264 35 27 £70,001 to £80,000 168 177 14 16 £80,001 to £90,000 148 169 15 16 £90,001 to £100,000 120 149 6 10 £100,001 to £110,000 152 185 12 4 £110,001 to £120,000 122 110 1 2 £120,001 to £130,000 92 106 1 1 £130,001 to £140,000 81 91 0 1 £140,001 to £150,000 73 70 1 0 £150,001 to £160,000 64 55 0 0 £160,001 to £170,000 35 28 0 0 £170,001 to £180,000 19 16 0 0 £180,001 to £190,000 8 14 0 0 £190,001 to £200,000 7 5 0 0 £200,001 and above 2 6 0 0

Clinicians’ remuneration includes only that which arises from their NHS Lothian work.


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1.(b) STAFF NUMBERS AND COSTS

Executive Board

Members


Permanent Staff

Inward Secondees

Other Staff Outward Secondees

2018 Total

2017 Total

STAFF COSTS £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Salaries & Wages 725 505 778,285 0 0 (1,901) 777,614 748,902 Social security costs 94 46 77,049 0 0 0 77,189 73,896 NHS scheme employers’ costs 33 17 100,236 0 0 0 100,286 97,336 Inward Secondees 0 0 0 562 0 0 562 346 Agency & recharged Univ. Staff 0 0 0 0 20,518 0 20,518 19,141

852 568 955,570 562 20,518 (1,901) 976,169 939,621 Compensation for loss of office 0 0 178 0 0 0 178 1,901 TOTAL 852 568 955,748 562 20,518 (1,901) 976,347 941,522

Included in the total staff costs above were costs of staff engaged directly on capital projects, charged to capital expenditure of:

0

92 STAFF NUMBERS

Whole time equivalent (WTE) 5 7 20,519 19 836 (35) 21,350 20,762

Included in the total staff above were disabled staff of: 372 286

Note: Staff pension benefits are provided through the NHS Superannuation Scheme for Scotland. Details of the scheme are in note 19


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1c) Staff Composition

2017/18 2016/17

Male Female

Prefer not to say

Total Male Female Prefer not

to say Total

Executive Directors 2 3 0 5 2 3 0 5

Non-Executive Directors and Employee Director

11 6 0 17 9 10 0 19

Senior Employees 43 36 0 79 47 40 0 87

Other 6,217 23,132 0 29,349 5,990 22,453 0 28,443

Total Headcount 6,273 23,177 0 29,450 6,048 22,506 0 28,554

1d) Sickness Absence

2017/18 2016/17

Sickness Absence Rate

4.91% 4.89%

1e) Staff Policies The Board is fully aware of their obligations around disability. Our application process allows disabled candidates to request any adjustments or assistance that they may be required at the time of interview and then if successful in the work place to allow them to undertake their role. If subsequently during the course of their employment, a member of staff becomes disabled, appropriate adjustments, following Occupational Health advice, would be made to allow them to remain in the workforce. An Annual Report is also prepared for the Staff Governance Committee by protected characteristics which includes disability and the trends and actions required are highlighted. NHS Lothian is also participating in the National Management Training Scheme for disabled candidates and currently two Management Trainees with a disability are working within NHS Lothian. Whilst there are no specific policies relating to disability, all of our policies and procedures recognise our roles and responsibilities around disability. 1(f) Other Employee Matters

Other employee matters such as, other diversity issues and equal treatment in employment and occupation; employment issues including employee consultation and/or participation; health and safety at work; trade union relationships; and human capital management such as career management and employability, pay policy etc.


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2a) Exit Packages

Exit Packages - Current Year

2018

Exit Package cost band Number of Compulsory

Number of other

departures agreed

Total number of exit

packages by cost band

< £10,000 0 0 0

£10,000 - £25,000 0 2 2

£25,000 - £50,000 0 3 3

£50,000 - £100,000 0 0 0

£100,000 - £150,000 0 0 0

£150,000 - £200,000 0 0 0

>£200,000 0 0 0

Total number of exit Packages by type

0 5 5

Total Resource Cost (£’000) 0 147 147

Exit Packages –Prior Year

2017

Exit Package cost band Number of Compulsory

Number of other departures

agreed

Total number of exit packages by

cost band

< £10,000 0 2 2

£10,000 - £25,000 0 8 8

£25,000 - £50,000 0 8 8

£50,000 - £100,000 0 0 0

£100,000 - £150,000 0 0 0

£150,000 - £200,000 0 0 0

>£200,000 0 0 0

Total number of exit Packages by type

0 18 18

Total Resource Cost (£’000) 0 442 442

2b) The Trade Union Facility Time

The Trade Union (Facility Time Publication Requirements) Regulations 2017 came into force on 1 April 2017. The regulations place a legislative requirement on relevant public sector employers to collate and publish, on an annual basis, a range of data on the amount and cost of facility time within their organisation. The data is required to be published on a website maintained by or on behalf of the employer before 31st July each year. The requirements for the data to be disclosed within the annual report and accounts were unclear at the time of issue. The Cabinet Office published supporting guidance on 2 June 2018 which has clarified the data should be disclosed. There are discussions currently underway at a national level to determine how to approach these requirements, and we intend to publish the information once the approach has been agreed


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3. PARLIAMENTARY ACCOUNTABILITY REPORT The Parliamentary Accountability report collates the key Parliamentary accountability documents into the annual report and accounts. Guidance on the content of the Parliamentary Accountability Report, while not fully applicable to entities financed by the Scottish Parliament, is set out at paragraph 5.3.29 of the FReM. The SPFM sets out the minimum mandatory accountability disclosures required to be included within the annual report namely losses and special payments; fees and charges; and remote contingent liabilities. The FReM also requests Boards provide detail relating to the regularity of expenditure and long-term expenditure trends. Regularity of expenditure Losses and Special Payments On occasion, the Board is required to write off balances which are no longer recoverable. Losses and special payments require formal approval to regularise such transactions and their notation in the annual accounts. The write-off of the following losses and special payments has been approved by the board:

No. of cases £000

Losses 489 3,504

In the year to 31 March 2018, there were no balances in excess of £250,000 written off. In 2017/18, the Board was required to pay out £2,972k in respect of 7 claims individually greater than £250,000 settled under the CNORIS scheme (2016/17: £1,332k, 4 claims). Further details on the scheme can be found in Note 1 (accounting policies) of the annual accounts. Remote Contingent Liabilities Contingent liabilities that meet the disclosure requirements in IAS37 Provisions and Contingent Liabilities are included in note 14 of the Notes to the Accounts. In addition, due to the nature of activities of NHS Lothian there are contingent liabilities for which IAS37 does not require disclosure because the probability of any requirement on the Board to meet future liabilities is considered to be remote.

27 June 2018 ………… ………….…………… Interim Chief Executive and Accountable Officer


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Independent auditor’s report to the members of NHS Lothian, the Auditor General for Scotland and the Scottish Parliament This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 120 of the Code of Audit Practice approved by the Auditor General for Scotland, we do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Report on the audit of the financial statements

Opinion on financial statements We have audited the financial statements in the annual report and accounts of NHS Lothian and its group for the year ended 31 March 2018 under the National Health Service (Scotland) Act 1978. The financial statements comprise the Statement of Consolidated Comprehensive Net Expenditure, the Consolidated Statement of Financial Position, the Statement of Consolidated Cash Flow, the Statement of Consolidated Changes in Taxpayers’ Equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and as interpreted and adapted by the 2017/18 Government Financial Reporting Manual (the 2017/18 FReM). In our opinion the accompanying financial statements:

• give a true and fair view in accordance with the National Health Service (Scotland) Act 1978 and directions made there under by the Scottish Ministers of the state of the affairs of the board and its group as at 31 March 2018 and of the net expenditure for the year then ended;

• have been properly prepared in accordance with IFRSs as adopted by the European Union, as interpreted and adapted by the 2017/18 FReM; and

• have been prepared in accordance with the requirements of the National Health Service (Scotland) Act 1978 and directions made there under by the Scottish Ministers.

Basis of opinion We conducted our audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the board and its group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern basis of accounting We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the board has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about its ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Responsibilities of the Accountable Officer for the financial statements As explained more fully in the Statement of the Chief Executive's Responsibilities as the Accountable Officer, the Accountable Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Accountable Officer is responsible for assessing the ability of the board


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and its group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless deemed inappropriate. Auditor’s responsibilities for the audit of the financial statements Our objectives are to achieve reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other information in the annual report and accounts The Accountable Officer is responsible for the other information in the annual report and accounts. The other information comprises the information other than the financial statements, the audited part of the Remuneration and Staff Report, and our independent auditor’s report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except on matters prescribed by the Auditor General for Scotland to the extent explicitly stated later in this report. In connection with our audit of the financial statements, our responsibility is to read all the other information in the annual report and accounts and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Report on regularity of expenditure and income

Opinion on regularity In our opinion in all material respects the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. Responsibilities for regularity The Accountable Officer is responsible for ensuring the regularity of expenditure and income. We are responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.

Report on other requirements

Opinions on matters prescribed by the Auditor General for Scotland In our opinion, the audited part of the Remuneration and Staff Report has been properly prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made there under by the Scottish Ministers. In our opinion, based on the work undertaken in the course of the audit

• the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made there under by the Scottish Ministers; and

• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made there under by the Scottish Ministers.


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Matters on which we are required to report by exception We are required by the Auditor General for Scotland to report to you if, in our opinion:

• adequate accounting records have not been kept; or

• the financial statements and the audited part of the Remuneration and Staff Report are not in agreement with the accounting records; or

• we have not received all the information and explanations we require for our audit

• there has been a failure to achieve a prescribed financial objective. We have nothing to report in respect of these matters. Chris Brown, for and on behalf of Scott-Moncrieff Exchange Place 3 Semple Street Edinburgh EH3 8BL

29 June 2018


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STATEMENT OF CONSOLIDATED COMPREHENSIVE NET EXPENDITURE FOR THE YEAR ENDED 31 MARCH 2018

2017

£’000 Note £’000

942,641 Staff costs 3a 978,071

Other operating expenditure: 3b

222,310 Independent Primary Care Services 226,399

367,156 Drugs and medical supplies 376,825

1,372,321 Other health care expenditure 1,326,590

2,904,428 Gross expenditure for the year 2,907,885

(1,231,934) Less: operating income 4 (1,233,595)

(1,845) Associates and joint ventures accounted for on an equity basis (2,781)

1,670,649 Net expenditure for the year 1,671,509

OTHER COMPREHENSIVE NET EXPENDITURE

7,508 Net gain on revaluation of Property Plant and Equipment SOCTE (18,278)

1,678,157 Total Comprehensive Expenditure 1,653,231

The Notes of the Accounts, numbered 1 to 25, form an integral part of these Accounts.

The presentation of the Consolidated Statement of Comprehensive Net Expenditure has been changed following a review of our financial statements in order to provide information which better reflects the activities of NHS Lothian. The comparative information in respect of 2016-17 has been presented above in the new format.

Full details of changes to the presentation of the Statement of Comprehensive Net Expenditure are disclosed in Note 20.


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SUMMARY OF CORE REVENUE RESOURCE OUTTURN £’000 £’000

Net Expenditure 1,671,509

Total Non Core Expenditure (see below) (91,141)

FHS Non Discretionary Allocation (87,058)

Donated Assets Income 2a 2,564

Endowment Net Operating Costs 13,582

Joint Ventures accounted for on an equity basis 2,781

Total Core Expenditure 1,512,237

Core Revenue Resource Limit 1,512,516

Saving/(excess) against Core Revenue Resource Limit 279

SUMMARY OF NON CORE REVENUE RESOURCE OUTTURN

Capital Grants to / (from) Other Bodies 15,145

Depreciation/Amortisation 34,827

Annually Managed Expenditure – Impairments 4,836

Annually Managed Expenditure - Creation of Provisions 10,345

Annually Managed Expenditure – Depreciation of Donated Assets 2a 705

Additional SGHSCD non core funding 12,355

IFRS PFI Expenditure 12,928

Total Non Core Expenditure 91,141

Non Core Revenue Resource Limit 91,141

Saving/(excess) against Non Core Revenue Resource Limit 0

SUMMARY RESOURCE OUTTURN Resource Expenditure Saving / (Excess)

£'000 £'000 £'000

Core 1,512,516 1,512,237 279

Non Core 91,141 91,141 0

Total 1,603,657 1,603,378 279


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CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 MARCH 2018 Consolidated

2017 Board 2017

Consolidated 2018

Board 2018

£’000 £’000 Note £’000 £’000

Non-current assets:

959,017 959,017 Property, plant and equipment 7c 1,005,598 1,005,598

868 868 Intangible assets 6a 534 534

Financial assets:

76,378 2,110 Available for sale financial assets 10 77,461 2,109

1,845 0 NHS Share of Joint Venture 4,626 0

44,608 44,608 Trade and other receivables 9 81,887 81,887

1,082,716 1,006,603 Total non-current assets 1,170,106 1,090,128

Current Assets:

17,450 17,450 Inventories 8 17,633 17,633

115,718 115,119 Trade and other receivables 9 84,742 76,447

15,308 12,860 Cash and cash equivalents 11 9,654 5,028

0 0 Available for sale financial assets 10 2,000 0

148,476 145,429 Total current assets 114,029 99,108

1,231,192 1,152,032 Total assets 1,284,135 1,189,236

Current liabilities

(75,069) (75,069) Provisions 13a (35,266) (35,266)

Financial liabilities:

(216,520) (213,531) Trade and other payables 12 (242,152) (239,636)

(291,589) (288,600) Total current liabilities (277,418) (274,902)

939,603 863,432 Non-current assets plus/(less) net current assets/(liabilities)

1,006,717 914,334

Non-current liabilities

(145,896) (145,896) Provisions 13a (199,811) (199,811)


(377,572) (377,421) Trade and other payables 12 (401,128) (401,128)

(523,468) (523,317) Total non-current liabilities (600,939) (600,939)

416,135 340,115 Assets less liabilities 405,778 313,395

Taxpayers' Equity

152,686 152,686 General fund SOCTE 114,270 114,270

187,429 187,429 Revaluation reserve SOCTE 199,125 199,125

1,845 0 Joint Venture reserves SOCTE 4,626 0

74,175 0 Fund held on Trust SOCTE 87,757 0

416,135 340,115 Total taxpayers' equity 405,778 313,395

The Notes to the Accounts, numbered 1 to 25, form an integral part of these Accounts. The Accountable Officer authorised these financial statements for issue on 27th June 2018

…… ………………………………………. Director of Finance 27 June 2018

……………………………………………. ..... Interim Chief Executive 27 June 2018


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STATEMENT OF CONSOLIDATED CASH FLOW FOR THE YEAR ENDED 31 MARCH 2018

2017

£’000 Note £’000 £’000

Cash flows from operating activities

(1,670,649) Net expenditure SOCTE (1,671,509)

50,323 Adjustments for non-cash transactions 2a 42,047

20,233 Add back: interest payable recognised in net operating cost 2b 30,695

(1,779) Deduct: interest receivable recognised in net operating cost 4 0

(314) Investment income (2,261)

115,905 Movement in working capital 2c 36,193

(1,486,281) Net cash outflow from operating activities 25c (1,564,835)

Cash flows from investing activities

(135,667) Purchase of property, plant and equipment (78,322)

(6) Purchase of intangible assets (669)

1,438 Proceeds of disposal of property, plant and equipment (5,373)

(555) Investment Additions 10 (12,353)

1,853 Receipts from sale of investments 10,586

2,093 Interest received 2,261

(130,844) Net cash outflow from investing activities 25c (83,870)

Cash flows from financing activities

1,606,004 Funding SOCTE 1,642,874

12,164 Movement in general fund working capital SOCTE (7,832)

1,618,168 Cash drawn down SOCTE 1,635,042

31,545 Capital element of payments in respect of finance leases and on-balance sheet PFI contracts

2c 38,704

8,205 Interest paid 475

(28,438) Interest element of finance leases and on-balance sheet PFI/PPP contracts

2b (31,170)

1,629,480 Net Financing 25c 1,643,051

12,355 Net Increase / (decrease) in cash and

cash equivalents in the period (5,654)

2,953 Cash and cash equivalents at the beginning of the period 15,308

15,308 Cash and cash equivalents at the end of the period 9,654

Reconciliation of net cash flow to movement in net

debt/cash

12,355 Increase/(decrease) in cash in year 11 (5,654)

2,953 Net debt/cash at 1 April 15,308

15,308 Net debt/cash at 31 March 9,654

The Notes to the Accounts, numbered 1 to 25, form an integral part of these Accounts


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STATEMENT OF CONSOLIDATED CHANGES IN TAXPAYERS’ EQUITY FOR YEAR ENDED 31 MARCH 2018 Note General

Fund Revaluation Reserve

Joint

Venture Reserves

Funds held in Trust

Total Reserves

£’000 £’000 £’000 £’000 £’000

Balance at 31 March 2017 152,686 187,429 1,845 74,175 416,135

Balance at 1 April 2017 152,686 187,429 1,845 74,175 416,135

Changes in taxpayers' equity for 2017/18

Net gain/(loss) on revaluation/indexation of property, plant and equipment

7a 0 19,027 0 0 19,027

Impairment of property, plant and equipment 0 (11,038) 0 0 (11,038)

Revaluation & impairments taken to operating costs 2a 0 10,289 0 0 10,289

Transfers between reserves 6,582 (6,582) 0 0 0

Movement in investment in IJB (2,781) 0 2,781 0 0

Net operating cost for the year CFS (1,685,091) 0 0 13,582 (1,671,509)

Total recognised income and expense for 2017/18 (1,681,290)

11,696 2,781 13,582

(1,653,231)

Funding:

Drawn down CFS 1,635,042

1,635,042

Movement in General Fund (Creditor) / Debtor CFS 7,832

7,832

Balance at 31 March 2018 SoFP 114,270

199,125

4,626

87,757

405,778

Balance at 31 March 2016 222,506 202,425 0 63,357 488,288

Balance at 1 April 2016 222,506 202,425 0 63,357 488,288

Changes in taxpayers’ equity for 2016/17

Net gain/(loss) on revaluation/indexation of property, plant and equipment

7a 0 (35,737) 0

0 (35,737)

Impairment of property, plant and equipment 7a 0 (43) 0 0 (43)

Revaluation & impairments taken to operating costs 2a 0 28,272 0 0 28,272

Transfers between reserves 7,488 (7,488) 0 0 0

Transfer of non current assets from other bodies (1,683,312) 0 1,845 10,818 (1,670,649)

Other non current asset transfer (1,675,824) (14,996) 1,845

10,818 (1,678,157)

Net operating cost for the year

CFS

Total recognised income and expense for 2016/17

Funding: CFS

Drawn down CFS 1,618,168 0 0 0 1,618,168

Movement in General Fund (Creditor) / Debtor (12,164) 0 0 0 (12,164)

Balance at 31 March 2017 SoFP 152,686 187,429 1,845

74,175 416,135


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NOTES TO THE ACCOUNTS FOR YEAR ENDED 31 MARCH 2018 NOTE 1 ACCOUNTING POLICIES

1. Authority In accordance with the accounts direction issued by Scottish Ministers under section 19(4) of the Public

Finance and Accountability (Scotland) Act 2000 appended, these Accounts have been prepared in accordance with the Government Financial Reporting Manual (FReM) issued by HM Treasury, which follows International Financial Reporting Standards as adopted by the European Union (IFRS as adopted by the EU), IFRIC Interpretations and the Companies Act 2006 to the extent that they are meaningful and appropriate to the public sector. They have been applied consistently in dealing with items considered material in relation to the accounts. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. (a) Standards, amendments and interpretations effective in 2017/18 There are no new standards, amendments or interpretations effective for the first time this year that have had a material effect on the financial statements. (b) Standards, amendments and interpretation early adopted this year There are no new standards, amendments or interpretations early adopted in 2016/17. (c) Standards, amendments and interpretations issued in the current year but not yet effective. The following standards, amendments and interpretations were issued in the current year but are not yet effective and have not been applied:

• IFRS 9 Financial Instruments. The standard is expected to be applied, through Government Financial Reporting Manual interpretation, in 2018/19. Application of the standard is not expected to have a material effect on the financial statements.

• IFRS 15 Revenue from Contracts with Customers. The standard is expected to be applied, through Government Financial Reporting Manual interpretation, in 2018/19. Application of the standard is not expected to have a material effect on the financial statements.

• IFRS 16 Leases was published by the International Accounting Standards Board in January 2016 and is applicable for accounting periods beginning on or after January 2019. This means that for NHS Lothian, the standard will be effective for the year ending 31 March 2020. IFRS16 will require leases to be recognised on the Statement of Financial Position as an asset which reflects the right to use the underlying asset, and a liability which represents the obligation to make lease payments. At the date of authorisation of these financial statements, IFRS 16 has not been adopted for use in the public sector and has not been included in the FReM. As such it is not yet possible to quantify the impact of IFRS 16 accurately.

2. Basis of Consolidation

Consolidation In accordance with IAS 27 – Separate Financial Statements, the Financial Statements consolidate the Lothian Health Board Endowment Fund operating under the name of the Edinburgh & Lothian’s Health Foundation. NHS Endowment Funds were established by the NHS (Scotland) Act 1978. The legal framework under which charities operate in Scotland is the Charities and Trustee Investment (Scotland) Act 2005. Under the 1978 Act Endowment Trustees are also members of the NHS Board. The Board members (who are also Trustees) are appointed by Scottish Ministers.


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The Edinburgh & Lothian Health Foundation is a Registered Charity with the Office of the Charity Regulator of Scotland (OSCR) and is required to prepare and submit Audited Financial Statements to OSCR on an annual basis. The basis of consolidation used is Merger Accounting. Any intragroup transactions between the Board and the Endowment Fund have been eliminated on consolidation. Note 25 to the Annual Accounts, details how these consolidated Financial Statements have been calculated. The integration of health and social care services under the terms of the Public Bodies (Joint Working) (Scotland) Act 2014 and associated secondary legislation impacts on Health Board disclosure requirements in the annual accounts. In accordance with IAS 28 – Investments in Associates and Joint Arrangements, the primary financial statements have been amended for the additional disclosure required to accurately reflect the interest of IJBs using the equity method of accounting. IJBs will act as principal in their own right. The Board’s contributions and subsequent expenditure in delivering services are treated as distinct and separate from the commissioning income that will be received. Note 25 to the Annual Accounts, details how these consolidated Financial Statements have been calculated.

3. Going Concern

The accounts are prepared on the going concern basis, which provides that the entity will continue in operational existence for the foreseeable future.

4. Accounting Convention The Accounts are prepared on a historical cost basis, as modified by the revaluation of property, plant and

equipment, intangible assets, inventories, available-for-sale financial assets and financial assets and liabilities (including derivative instruments) at fair value.

5. Funding Most of the expenditure of the Health Board as Commissioner is met from funds advanced by the Scottish

Government within an approved revenue resource limit. Cash drawn down to fund expenditure within this approved revenue resource limit is credited to the general fund.

All other income receivable by the Board that is not classed as funding is recognised in the year in which it is receivable.

Where income is received for a specific activity which is to be delivered in the following financial year, that

income is deferred. Income from the sale of non-current assets is recognised only when all material conditions of sale have

been met, and is measured as the sums due under the sale contract. Non-discretionary funding out with the RRL is allocated to match actual expenditure incurred for the

provision of specific pharmaceutical, dental or ophthalmic services identified by the Scottish Government. Non-discretionary expenditure is disclosed in the accounts and deducted from operating costs charged against the RRL in the Statement of Resource Outturn.

Funding for the acquisition of capital assets received from the Scottish Government is credited to the

general fund when cash is drawn down. Expenditure on goods and services is recognised when, and to the extent that they have been received,

and is measured at the fair value of those goods and services. Expenditure is recognised in the Statement of Comprehensive Net Expenditure except where it results in the creation of a non-current asset such as property, plant and equipment.


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6. Property, plant and equipment The treatment of capital assets in the accounts (capitalisation, valuation, depreciation, particulars

concerning donated assets) is in accordance with the NHS Capital Accounting Manual. Title to properties included in the accounts is held by Scottish Ministers.

6.1 Recognition Property, Plant and Equipment is capitalised where: it is held for use in delivering services or for administrative purposes; it is probable that future economic benefits will flow to, or service potential be provided to, the Board; it is expected to be used for more than one financial year; and the cost of the item can be measured reliably. All assets falling into the following categories are capitalised:

1) Property, plant and equipment assets which are capable of being used for a period which could exceed one year, and have a cost equal to or greater than £5,000.

2) In cases where a new hospital would face an exceptional write off of items of equipment costing individually less than £5,000, the Board has the option to capitalise initial revenue equipment costs with a standard life of 10 years.

3) Assets of lesser value may be capitalised where they form part of a group of similar assets

purchased at approximately the same time and cost over £20,000 in total, or where they are part of the initial costs of equipping a new development and total over £20,000.

6.2 Measurement Valuation: All property, plant and equipment assets are measured initially at cost, representing the costs directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management. All assets that are not held for their service potential (i.e. investment properties and assets held for sale), including operational assets which are surplus to requirements where there are no restrictions on disposal which would prevent access to the market, are measured subsequently at fair value as follows: Specialised NHS Land, buildings, equipment, installations and fittings are stated at depreciated replacement cost, as a proxy for fair value as specified in the FReM.

Non specialised land and buildings, such as offices, are stated at fair value.

Valuations of all land and building assets are reassessed by valuers under a 5-year programme of professional valuations and adjusted in intervening years to take account of movements in prices since the latest valuation. The valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Manual insofar as these terms are consistent with the agreed requirements of the Scottish Government.

Non specialised equipment, installations and fittings are valued at fair value. Boards value such assets using the most appropriate valuation methodology available (for example, appropriate indices). A depreciated historical cost basis as a proxy for fair value in respect of such assets which have short useful lives or low values (or both).

Assets under construction are held at cost until operational. Thereafer they are valued as above according to the asset categories. These are also subject to impairment review.

To meet the underlying objectives established by the Scottish Government the following accepted variations of the RICS Appraisal and Valuation Manual have been required:

Specialised operational assets are valued on a modified replacement cost basis to take account of modern substitute building materials and locality factors only.


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Operational assets which are in use delivering front line services or back office functions, and surplus assets with restrictions on their disposal, are valued at current value in existing use. Assets have been assessed as surplus where there is no clear plan to bring the asset back into future use as an operational asset.

Subsequent expenditure:

Subsequent expenditure is capitalised into an asset’s carrying value when it is probable the future economic benefits associated with the item will flow to the Board and the cost can be measured reliably. Where subsequent expenditure does not meet these criteria the expenditure is charged to the Statement of Comprehensive Net Expenditure. If part of an asset is replaced, then the part it replaces is de-recognised, regardless of whether or not it has been depreciated separately.

Revaluations and Impairment:

Increases in asset values arising from revaluations are recognised in the revaluation reserve, except where, and to the extent that, they reverse an impairment previously recognised in the Statement of Comprehensive Net Expenditure, in which case they are recognised as income. Movements on revaluation are considered for individual assets rather than groups or land/buildings together.

Permanent decreases in asset values and impairments are charged gross to the Statement of Comprehensive Net Expenditure. Any related balance on the revaluation reserve is transferred to the General Fund. Gains and losses on revaluation are reported in the Statement of Comprehensive Net Expenditure. 6.3 Depreciation Items of Property, Plant and Equipment are depreciated to their estimated residual value over their remaining useful economic lives in a manner consistent with the consumption of economic or service delivery benefits.

Depreciation is charged on each main class of tangible asset as follows:

1) Freehold land is considered to have an infinite life and is not depreciated.

2) Assets in the course of construction and residual interests in off-balance sheet PFI contract assets are not depreciated until the asset is brought into use or reverts to the Board, respectively.

3) Property, Plant and Equipment which has been reclassified as ‘Held for Sale’ ceases to be

depreciated upon the reclassification. 4) Buildings, installations and fittings are depreciated on current value over the estimated

remaining life of the asset, as advised by the appointed valuer. They are assessed in the context of the maximum useful lives for building elements.

5) Equipment is depreciated over the estimated life of the asset. 6) Property, plant and equipment held under finance leases are depreciated over the shorter of

the lease term and the estimated useful life.

Depreciation is charged on a straight line basis. The following asset lives have been used:

Asset Category/Component Useful Life

Building – Structural 5 – 75 years* Building – Engineering and External Plant 15 – 35 years


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Medical Equipment 3 –15 years Vehicles 7 years Furniture 10 years Office & IT Equipment 5 – 8 years *The useful life of building – structural is based on independent valuers recommendations.

7. Intangible Assets

7.1 Recognition Intangible assets are non-monetary assets without physical substance which are capable of being sold

separately from the rest of the Board’s business or which arise from contractual or other legal rights. They are recognised only where it is probable that future economic benefits will flow to, or service potential be provided to, the Board and where the cost of the asset can be measured reliably.

Intangible assets that meet the recognition criteria are capitalised when they are capable of being used in a Board’s activities for more than one year and they have a cost of at least £5,000.

The main classes of intangible assets recognised are:

Internally generated intangible assets: Internally generated goodwill, brands, mastheads, publishing titles, customer lists and similar items are not

capitalised as intangible assets. Expenditure on research is not capitalised. Expenditure on development is capitalised only where all of the following can be demonstrated:

• the project is technically feasible to the point of completion and will result in an intangible asset for sale or use;

• the Board intends to complete the asset and sell or use it;

• the Board has the ability to sell or use the asset;

• how the intangible asset will generate probable future economic or service delivery benefits e.g. the presence of a market for it or its output, or where it is to be used for internal use, the usefulness of the asset;

• adequate financial, technical and other resources are available to the Board to complete the development and sell or use the asset; and

• the Board can measure reliably the expenses attributable to the asset during development. Expenditure so deferred is limited to the value of future benefits.

Software:

Software which is integral to the operation of hardware e.g. an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software which is not integral to

the operation of hardware e.g. application software, is capitalised as an intangible asset. Software licences:

Purchased computer software licences are capitalised as intangible assets where expenditure of at least £5,000 is incurred.

Carbon Emissions (Intangible Assets): A cap and trade scheme gives rise to an asset for allowances held and a liability for the obligation to deliver allowances equal to emissions that have been made.


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Intangible Assets, such as EU Greenhouse Gas Emission Allowances intended to be held for use on a continuing basis whether allocated by government or purchased are classified as intangible assets. Allowances that are issued for less than their fair value are measured initially at their fair value. When allowances are issued for less than their fair value, the difference between the amount paid and fair value is revaluation and charged to the general fund. The general fund is charged with the same proportion of the amount of the revaluation, which the amount of the grant bears to the acquisition cost of the asset. A provision is recognised for the obligation to deliver allowances equal to emissions that have been made. It is measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. This will usually be the present market price of the number of allowances required to cover emissions made up to the balance sheet date. Websites: Websites are capitalised only when it is probable that future economic benefits will flow to, or service potential be provided to, the Board; where the cost of the asset can be measured reliably, and where the cost is at least £5,000.

7.2 Measurement

Valuation

Intangible assets are recognised initially at cost, comprising all directly attributable costs needed to create, produce and prepare the asset to the point that it is capable of operating in the manner intended by management.

Subsequently intangible assets that are not held for their service potential (i.e. assets held for sale),

including operational assets which are surplus to requirements where there are no restrictions on disposal which would prevent access to the market, are measured at fair value. Where an active (homogeneous) market exists, intangible assets are carried at fair value. Where no active market exists, the intangible asset is revalued, using indices or some suitable model, to the lower of depreciated replacement cost and value in use where the asset is income generating. Where there is no value in use, the intangible asset is valued using depreciated replacement cost. These measures are a proxy for fair value.

Revaluation and impairment

Increases in asset values arising from revaluations are recognised in the revaluation reserve, except where, and to the extent that, they reverse an impairment previously recognised in the Statement of Comprehensive Net Expenditure, in which case they are recognised in income.

Permanent decreases in asset values and impairments are charged gross to the Statement of

Comprehensive Net Expenditure. Any related balance on the revaluation reserve is transferred to the General Fund.

Temporary decreases in asset values or impairments are charged to the revaluation reserve to the extent

that there is an available balance for the asset concerned, and thereafter are charged to the Statement of Comprehensive Net Expenditure.

Intangible assets held for sale are reclassified to ‘non-current assets held for sale’ measured at the lower of

their carrying amount or ‘fair value less costs to sell’. Operational assets which are in use delivering front line services or back office functions, and surplus

assets with restrictions on their disposal, are valued at current value in existing use. Assets have been assessed as surplus where there is no clear plan to bring the asset back into future use as an operational asset.

7.3 Amortisation

Intangible assets are amortised to their estimated residual value over their remaining useful economic lives in a manner consistent with the consumption of economic or service delivery benefits.


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Amortisation is charged to the Statement of Comprehensive Net Expenditure on each main class of intangible asset as follows:

1) Internally generated intangible assets. Amortised on a systematic basis over the period

expected to benefit from the project. 2) Software. Amortised over their expected useful life. 3) Software licences. Amortised over the shorter term of the licence and their useful economic

lives.

4) Other intangible assets. Amortised over their expected useful life. 5) Intangible assets which has been reclassified as ‘Held for Sale’ ceases to be amortised upon

the reclassification.

Amortisation is charged on a straight line basis. The following asset lives have been used: Asset Category/Component Useful Life Application Software 4 years

8. Non-current assets held for sale

Non-current assets intended for disposal are reclassified as ‘Held for Sale’ once all of the following criteria are met:

• the asset is available for immediate sale in its present condition subject only to terms which are usual and customary for such sales;

• the sale must be highly probable i.e.:

� management are committed to a plan to sell the asset; � an active programme has begun to find a buyer and complete the sale; � the asset is being actively marketed at a reasonable price; � the sale is expected to be completed within 12 months of the date of classification as ‘Held for

Sale’; and � the actions needed to complete the plan indicate it is unlikely that the plan will be dropped or

significant changes made to it.

Following reclassification, the assets are measured at the lower of their existing carrying amount and their ‘fair value less costs to sell’. Depreciation ceases to be charged and the assets are not revalued, except where the ‘fair value less costs to sell’ falls below the carrying amount. Assets are de-recognised when all material sale contract conditions have been met. Property, plant and equipment which is to be scrapped or demolished does not qualify for recognition as ‘Held for Sale’ and instead is retained as an operational asset and the asset’s economic life is adjusted. The asset is de-recognised when scrapping or demolition occurs.

9. Donated Assets

Non-current assets that are donated or purchased using donated funds are included in the Balance Sheet initially at the current full replacement cost of the asset. The accounting treatment, including the method of valuation, follows the rules in the NHS Capital Accounting Manual.


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10. Sale of Property, plant and equipment, intangible assets and non-current assets held for sale Disposal of non-current assets is accounted for as a reduction to the value of assets equal to the net book

value of the assets disposed. When set against any sales proceeds, the resulting gain or loss on disposal will be recorded in the Statement of Comprehensive Net Expenditure. Non-current assets held for sale will include assets transferred from other categories and will reflect any resultant changes in valuation.

11. Leasing Finance leases Where substantially all risks and rewards of ownership of a leased asset are borne by the Board, the asset

is recorded as Property, Plant and Equipment and a corresponding liability is recorded. Assets held under finance leases are valued at their fair values and are depreciated over the remaining period of the lease in accordance with IFRS.

The asset and liability are recognised at the inception of the lease, and are de-recognised when the liability

is discharged, cancelled or expires. The minimum lease payments (annual rental less operating costs e.g. maintenance and contingent rental) are apportioned between the repayment of the outstanding liability and a finance charge. The annual finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability using either the implicit interest rate or another relevant basis of estimation such as the sum of the digits method. Finance charges are recorded as interest payable in the Statement of Comprehensive Net Expenditure. Contingent rental and operating costs are charged as expenses in the periods in which they are incurred.

Operating leases Other leases are regarded as operating leases and the rentals are charged to expenditure on a straight-line

basis over the term of the lease. Operating lease incentives received are added to the lease rentals and charged to expenditure over the life of the lease.

Leases of land and buildings Where a lease is for land and buildings, the land component is separated from the building component and

the classification for each is assessed separately. Leased land is treated as an operating lease unless title to the land is expected to transfer.

12. Impairment of non-financial assets

Assets that are subject to depreciation and amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Where an asset is not held for the purpose of generating cash flows, value in use is assumed to equal the cost of replacing the service potential provided by the asset, unless there has been a reduction in service potential. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffer an impairment are reviewed for possible reversal of the impairment. Impairment losses charged to the Statement Of Comprehensive Net Expenditure are deducted from future operating costs to the extent that they are identified as being reversed in subsequent revaluations.

13. General Fund Receivables and Payables

Where the Health Board has a positive net cash book balance at the year end, a corresponding creditor is created and the general fund debited with the same amount to indicate that this cash is repayable to the SGHSCD. Where the Health Board has a net overdrawn cash position at the year end, a corresponding debtor is created and the general fund credited with the same amount to indicate that additional cash is to be drawn down from the SGHSCD.


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14. Inventories Inventories are valued at the lower of cost and net realisable value. Taking into account the high turnover of

NHS inventories, the use of average purchase price is deemed to represent current cost. Work in progress is valued at the cost of the direct materials plus the conversion costs and other costs incurred to bring the goods up to their present location, condition and degree of completion.

15. Losses and Special Payments Operating expenditure includes certain losses which would have been made good through insurance cover

had the NHS not been bearing its own risks. Had the NHS provided insurance cover, the insurance premiums would have been included as normal revenue expenditure.

16. Employee Benefits Short-term Employee Benefits

Salaries, wages and employment-related payments are recognised in the year in which the service is received from employees. The cost of annual leave and flexible working time entitlement earned but not taken by employees at the end of the year is recognised in the financial statements to the extent that employees are permitted to carry-forward leave into the following year. Pension Costs

The Board participates in NHS Superannuation Schemes for Scotland providing pension benefits. Contributions are credited to the Exchequer and are deemed to be invested in a portfolio of Government Securities. The Board is unable to identify its share of the underlying notional assets and liabilities of the scheme on a consistent and reasonable basis and therefore accounts for the scheme as if it were a defined contribution scheme, as required by IAS 19 ‘Employee Benefits’. As a result, the amount charged to the Statement of Comprehensive Net Expenditure represents the Board’s employer contributions payable to the scheme in respect of the year. The contributions deducted from employees are reflected in the gross salaries charged and are similarly remitted to Exchequer. The pension cost is assessed every four years by the Government Actuary and determines the rate of contributions required. The most recent actuarial valuation is published by the Scottish Public Pensions Agency and is available on their website.

Additional pension liabilities arising from early retirements are not funded by the scheme except where the

retirement is due to ill-health. The full amount of the liability for the additional costs is charged to the Statement of Comprehensive Net Expenditure at the time the Board commits itself to the retirement, regardless of the method of payment.

17. Clinical and Medical Negligence Costs Employing health bodies in Scotland are responsible for meeting medical negligence costs up to a threshold

per claim. Costs above this threshold are reimbursed to Boards from a central fund held as part of the Clinical Negligence and Other Risks Indemnity Scheme (CNORIS) by the Scottish Government.

NHS Lothian provide for all claims notified to the NHS Central Legal Office according to the value of the claim and the probability of settlement. Claims assessed as ‘Category 3’ are deemed most likely and provided for in full, those in ‘Category 2’ as 50% of the claim and those in ‘category 1’ as nil. The balance of the value of claims not provided for is disclosed as a contingent liability. This procedure is intended to estimate the amount considered to be the liability in respect of any claims outstanding and which will be recoverable from the Clinical Negligence and Other Risks Indemnity Scheme in the event of payment by an individual health body. The corresponding recovery in respect of amounts provided for is recorded as a debtor and that in respect of amounts disclosed as contingent liabilities are disclosed as contingent assets. NHS Lothian also provides for its liability from participating in the scheme. The Participation in CNORIS provision recognises the Board’s respective share of the total liability of NHS Scotland as advised by the Scottish Government and based on information prepared by NHS Boards and the Central Legal Office. The movement in the provisions between financial years is matched by a corresponding adjustment in AME provision and is classified as non-core expenditure.


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18. Related Party Transactions Material related party transactions are disclosed in the note 24 in line with the requirements of IAS 24.

Transactions with other NHS bodies for the commissioning of health care are summarised in Note 4.

19. Value Added Tax

Most of the activities of the Board are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of non-current assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

20. PFI/HUB/NPD Schemes

Transactions financed as revenue transactions through the Private Finance Initiative or alternative initiatives such as HUB or the Non Profit Distributing Model (NPD) are accounted for in accordance with the HM Treasury application of IFRIC 12, Service Concession Arrangements, outlined in the FReM.

Transactions which meet the IFRIC 12 definition of a service concession, as interpreted in HM Treasury’s FReM, are accounted for as ‘on-balance sheet’ by the Board. The underlying assets are recognised as Property, Plant and Equipment and Intangible Assets at their fair value. An equivalent liability is recognised in accordance with IAS 17. Where it is not possible to separate the finance element from the service element of unitary payment streams this has been estimated from information provided by the operator and the fair values of the underlying assets. Assets are subsequently revalued in accordance with the treatment specified for their applicable asset categories.

The annual contract payments are apportioned between the repayment of the liability, a finance cost and the charges for services. The finance cost is calculated using the implicit interest rate for the scheme.

The service charge and the finance cost interest element are charged in the Statement of Comprehensive Net Expenditure.

21. Provisions The Board provides for legal or constructive obligations that are of uncertain timing or amount at the balance

sheet date on the basis of the best estimate of the expenditure required to settle the obligation. Where the effect of the time value of money is significant, the estimated cash flows are discounted using the discount rate prescribed by HM Treasury.

22. Contingencies Contingent assets (that is, assets arising from past events whose existence will only be confirmed by one or

more future events not wholly within the Board’s control) are not recognised as assets, but are disclosed in note 14 where an inflow of economic benefits is probable.

Contingent liabilities are not recognised, but are disclosed in note 14, unless the probability of a transfer of economic benefits is remote. Contingent liabilities are defined as:

• possible obligations arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity’s control; or

• present obligations arising from past events but for which it is not probable that a transfer of economic benefits will arise or for which the amount of the obligation cannot be measured with sufficient reliability.

23. Corresponding Amounts

Corresponding amounts are shown for the primary statements and notes to the financial statements. Where

the corresponding amounts are not directly comparable with the amount to be shown in respect of the

current financial year, IAS 1 ‘Presentation of Financial Statements’, requires that they should be adjusted

and the basis for adjustment disclosed in a note to the financial statements.


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24. Financial Instruments

Financial assets Classification The Board classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss comprise derivatives. Assets in this category are classified as current assets. The Board does not trade in derivatives and does not apply hedge accounting. (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables comprise trade and other receivables and cash at bank and in hand in the balance sheet. (c) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Available for sale financial assets comprise investments.

Recognition and measurement Financial assets are recognised when the Board becomes party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the asset have expired or have been transferred and the Board has transferred substantially all risks and rewards of ownership. (a) Financial assets at fair value through profit or loss Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Comprehensive Net Expenditure. Financial assets carried at fair value through profit or loss are subsequently measured at fair value. Gains or losses arising from changes in the fair value are presented in the Statement of Comprehensive Net Expenditure. (b) Loans and receivables Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of loans and receivables is established when there is objective evidence that the Board will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the loan and receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Statement of Comprehensive Net Expenditure. When a loan or receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited in the Statement of Comprehensive Net Expenditure.


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(c) Available-for-sale financial assets Available-for-sale financial assets are initially recognised and subsequently carried at fair value. Changes in the fair value of financial assets classified as available for sale are recognised in equity in other reserves. When financial assets classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the Statement of Comprehensive Net Expenditure. Dividends on available-for-sale equity instruments are recognised in the Statement of Comprehensive Net Expenditure when the Board’s right to receive payments is established. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment. The Board assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the Statement of Comprehensive Net Expenditure. Impairment losses recognised in the Statement of Comprehensive Net Expenditure on equity instruments are not reversed through the income statement.

Financial Liabilities Classification The Board classifies its financial liabilities in the following categories: at fair value through profit or loss, and other financial liabilities. The classification depends on the purpose for which the financial liabilities were issued. Management determines the classification of its financial liabilities at initial recognition. (a) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss comprise derivatives. Liabilities in this category are classified as current liabilities. The NHS Board does not trade in derivatives and does not apply hedge accounting. (b) Other financial liabilities Other financial liabilities are included in current liabilities, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current liabilities. The NHS Board’s other financial liabilities comprise trade and other payables in the balance sheet. Recognition and measurement Financial liabilities are recognised when the NHS Board Scotland becomes party to the contractual provisions of the financial instrument. A financial liability is removed from the balance sheet when it is extinguished, that is when the obligation is discharged, cancelled or expired. (a) Financial liabilities at fair value through profit or loss Financial liabilities carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial liabilities carried at fair value through profit or loss are subsequently measured at fair value. Gains or losses arising from changes in the fair value are presented in the Statement of Comprehensive Net Expenditure.


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(b) Other financial liabilities Other financial liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

25. Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments. Operating segments do not relate to the analysis of expenditure shown in notes 3 for Hospital & Community, Family Health and Other Service and Administration Costs, the basis of which relates to Scottish Government funding streams and the classification of which varies depending on Scottish Government reporting requirements. The segmental information for NHS Lothian is detailed in Note 5.

26. Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, cash balances held with

the Government Banking Service, balances held in commercial banks and other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. Where the Government Banking Service is using Citi and Royal Bank of Scotland Group to provide the banking services, funds held in these accounts should not be classed as commercial bank balances.

The NHS Lothian Accounts include the consolidation of The Edinburgh & Lothian Health Foundation (ELHF).

The Foundation investments are categorised as level 1 in accordance with IFRS 13 and are denominated in pounds sterling.

27. Foreign exchange The functional and presentational currencies of the Board are sterling. A transaction which is denominated in a foreign currency is translated into the functional currency at the

spot exchange rate on the date of the transaction. Where the Board has assets or liabilities denominated in a foreign currency at the balance sheet date:

• monetary items (other than financial instruments measured at ‘fair value through income and expenditure’) are translated at the spot exchange rate on 31 March;

• non-monetary assets and liabilities measured at historical cost are translated using the spot exchange rate at the date of the transaction; and

• non-monetary assets and liabilities measured at fair value are translated using the spot exchange rate at the date the fair value was determined.

Exchange gains or losses on monetary items (arising on settlement of the transaction or on re-translation at the balance sheet date) are recognised in income or expenditure in the period in which they arise.

Exchange gains or losses on non-monetary assets and liabilities are recognised in the same manner as

other gains and losses on these items. 28. Third party assets

Assets belonging to third parties (such as money held on behalf of patients) are not

recognised in the accounts since the Board has no beneficial interest in them.

However, they are disclosed in Note 23 to the accounts in accordance with the requirement

of HM Treasury’s Financial Reporting Manual. 29. Key sources of judgement and estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.


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The Board makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The Board makes judgements in applying accounting policies.

2. NOTES TO THE CASHFLOW STATEMENT 2a) Consolidated adjustments for non-cash transactions

2017

£’000 Expenditure Not Paid In Cash Note £’000

34,812 Depreciation on Purchased Assets 7a 36,629

1,000 Amortisation 6 1,003

758 Depreciation on Donated Assets 7a 705

43 Impairments on PPE charged to SOCNE 7,046

28,229 Net revaluation on PPE charged to SOCNE 3,243

312 Loss/(Profit) on disposal of property, plant and equipment 83

(2,477) Funding of Donated assets 7a (2,564)

0 Transfer of assets

(1,845) IJB joint venture share SoCNE (2,781)

(10,509) Other non cash transactions (losses) on investments (1,317)

50,323 Total Expenditure Not Paid In Cash 42,047

2b Interest Payable

28,438 PFI Finance Lease charges allocated in year 18 31,170

(8,205) Unwinding of Discount (475)

20,233 Net interest payable CFS 30,695

2c Consolidated movement in working capital

2016/17 Opening

Balances Closing

Balances Net Movement

£’000 Note £’000 £’000 £’000

INVENTORIES

(1,372) Balance Sheet 8 17,450 17,633

(1,372) Net Decrease/(Increase) (183)

TRADE AND OTHER RECEIVABLES

(30,114) Due within one year 9 115,718 84,742

(11,727) Due after more than one year 9 44,608 81,887

(41,841) 160,326 166,629

181 Less: Property, Plant & equipment included in above (7,740) (17,991)

152,586 148,638

(41,660) Net Decrease/(Increase) 3,948

TRADE AND OTHER PAYABLES

10,575 Due within one year 12 216,520 242,152

93,152 Due after more than one year 12 377,572 401,128 (2,689) Less: Property, Plant & Equipment (Capital) included

in above

(12,164) Less: General Fund Creditor included in above 12 (12,860) (5,028)

(31,545) Less: Lease and PFI Creditors included in above 12 (217,918) (256,622)

363,314 381,630

57,329 Net (Decrease)/Increase 18,316


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PROVISIONS

101,608 Due within one year 13a 220,965 235,077

101,608 Net (Decrease)/Increase 14,112

115,905 NET MOVEMENT Decrease/(Increase) CFS 36,193

3. EXPENDITURE

3a) Staff Costs

2017 2018

Board 2018

Consolidated

£’000 £’000 £’000

255,398 Medical and Dental 264,060 264,060

395,756 Nursing 400,582 400,582

291,487 Other Staff 313,429 313,429

942,641 Total 978,071 978,071

Further detail and analysis of employee costs can be found in the Remuneration and Staff Report, forming part of the Accountability Report. 3b) Other operating expenditure Independent Primary Care Services:

2018 2018

2017 Board Consolidation

£’000 £’000 £’000

120,390 General Medical Services 124,386 124,386

27,612 Pharmaceutical Services 27,014 27,014

58,281 General Dental Services 58,668 58,668

16,027 General Ophthalmic Services 16,331 16,331

222,310 Total 226,399 226,399

Drugs and Medical Supplies:

£’000 £’000 £’000

159,770 Prescribed drugs Primary Care 159,480 159,480

114,910 Prescribed drugs Secondary Care 121,757 121,757

92,476 Medical Supplies 95,588 95,588

367,156 Total 376,825 376,825

Other health care expenditure:

£’000 £’000 £’000

868,663 Contribution to Integration Joints Boards 911,206 911,206

9,583 Other NHS Scotland Bodies 9,474 9,474

1,274 Health Bodies outside Scotland 1,304 1,304

9,578 Private sector 8,235 8,235

14,464 Goods and services from voluntary organisations 18,536 18,536

73,599 Resource Transfer 96,652 96,652

312 Loss on disposal of assets 83 83

391,068 Other operating expenses 278,913 278,913

297 Statutory audit fee 284 284


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3,483 Endowment Fund expenditure 0 1,903

1,372,321 Total 1,324,687 1,326,590

1,961,787 Total Other Operating Expenditure 1,927,911 1,929,814

During 2017/18 the Board's external auditors received £7,200 in relation to non audit work. This non audit work was the audit of the Private Patient Funds. Included within Endowment fund expenditure is £13,700 in relation to the External Audit of the Endowment Fund.

Other operating expenses includes property related costs £48m, depreciation and amortisation £38m, Clinical negligence and CNORIS (note 13) £25m, e-health costs £20m and equipment related (including maintenance) £15m.

4. INCOME

2018 2018

2017 Board Consolidated

£’000 NHS Scotland Bodies

Note £’000 £’000

1,102 SGHSCD 1,310 1,310

229,593 Boards 228,815 228,815

5,350 NHS Non-Scottish Bodies 5,613 5,613

2,314 Private Patients 2,429 2,429

868,663 Income for services commissioned by Integration Joint Board 911,089 911,089

12,065 Patient charges for primary care 12,034 12,034

2,501 Donations 2,564 2,564

59,296 Contributions in respect of clinical and medial negligence claims

8,863 8,863

Non NHS:

276 Overseas patients 672 672

14,002 Endowment Fund Income 0 15,485

36,772 Other 44,721 44,721

1,231,934 Total Income SOCNE 1,218,110 1,233,595

5. SEGMENTAL

The net operating costs of the Board are analysed on the basis of Individual Business Units reported to the Board for performance management purposes. The acute specialist hospital services are reported under the University Hospital Support Services. East Lothian, Mid Lothian, West Lothian and City of Edinburgh Partnership Business Units are responsible for delivery of Family and Community health services and include Child and Adult Mental Health, Learning Disabilities and acute adult and child mental health services at the Royal Edinburgh Hospital. Corporate Department budgets include the non-clinical support services performed to support the Board’s core operations and Strategic Budgets represent the Board’s commissioning of services, and central overhead costs of the Board. As responsibilities for care shift from the acute sector the segmental analysis and comparatives will reflect these changes. The segments that have been used to report performance management this year are as follows:

• University Hospital Support Services • East Lothian; Mid Lothian; West Lothian and City of Edinburgh Partnership Business Unit • Corporate and Strategic Departments

• Edinburgh Integration Joint Boards (IJB) • Endowments


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Assets and liabilities are not reported as part of performance management arrangements so this information is not provided.

Univ Hospitals

Support Services

Partnership Business

Units

Corporate Edinburgh IJB

Mid Lothian IJB

Endowments Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Net operating cost 2017/18

923,266 689,527 75,079 (2,331) (450) (13,582) 1,671,509

Net operating cost 2016/17

901,546 648,511 133,255 (1,845) 0 (10,818) 1,670,649

6. INTANGIBLE ASSETS

Software Licences

Total

Note £’000 £’000 Cost or Valuation: As at 1 April 2017 19,963 19,963 Additions 669 669 Disposals (1,364) (1,364)

As at 31 March 2018 19,268 19,268

Amortisation As at 1 April 2017 19,095 19,095 Provided during the year 1,003 1,003 Disposals (1,364) (1,364) At 31 March 2018 18,734 18,734

Net Book Value at 1 April 2017 868 868

Net Book Value at 31 March 2018 SoFP 534 534

PRIOR YEAR – CONSOLIDATED

Software Licences Total

Note £’000 £’000 Cost or Valuation: 20,623 20,623 As at 1 April 2016 6 6 Additions (666) (666) As at 31 March 2017 19,963 19,963

Amortisation 18,761 18,761 As at 1 April 2016 1,000 1,000 Provided during the year (666) (666) At 31 March 2017 19,095 19,095

Net Book Value at 1 April 2016 1,862 1,862

Net Book Value at 31 March 2017 SoFP 868 868


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7a) PROPERTY, PLANT AND EQUIPMENT – CONSOLIDATED

Note

Land (including

under buildings)

Buildings (excluding dwellings) Dwellings

Transport Equipment

Plant & Machinery

Information Technology

Furniture & Fittings

Assets Under

Construction Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Cost or valuation At 1 April 2017 58,559 665,612 1,060 402 133,979 28,227 2,257 211,619 1,101,715 Additions - Purchased 798 905 0 0 11,468 2,828 0 62,323 78,322 Additions - Donated 0 0 0 0 241 0 0 2,323 2,564 Completions 0 38,077 0 0 2,145 243 0 (40,465) 0 Revaluation 3,613 (3,728) 184 0 0 0 0 0 69 Impairment Charges 0 (13,286) 0 0 0 0 0 0 (13,286) Disposals - Purchased (4,815) 0 (166) (256) (12,038) (214) (984) 0 (18,473) Disposals - Donated 0 0 0 (46) (989) 0 0 0 (1,035) At 31 March 2018 58,155 687,580 1,078 100 134,806 31,084 1,273 235,800 1,149,876

Depreciation At 1 April 2017 0 31,539 64 348 84,486 24,498 1,763 0 142,698 Provided during the year - purchased 0 23,245 43 0 11,060 2,156 125 0 36,629 Provided during the year - donated 0 386 0 10 309 0 0 0 705 Revaluation 0 (18,888) (70) 0 0 0 0 0 (18,958) Impairment Charge 0 (2,248) 0 0 0 0 0 0 (2,248) Disposals – Purchased 0 0 (21) (256) (12,038) (214) (984) 0 (13,513) Disposals – Donated 0 0 0 (46) (989) 0 0 0 (1,035) At 31 March 2018 0 34,034 16 56 82,828 26,440 904 0 144,278

Net book value at 1 April 2017 58,559 634,073 996 54 49,493 3,729 494 211,619 959,017 Net book value at 31 March 2018 SoFP 58,155 653,546 1,062 44 51,978 4,644 369 235,800 1,005,598

Open Market Value of Land, buildings and Dwellings Included Above

8,850 0

Asset financing: Owned - purchased 58,155 365,789 1,062 0 50,803 4,644 369 207,840 688,662 Owned – donated 0 4,815 0 44 1,175 0 0 4,969 11,003 Finance leased 0 4,483 0 0 0 0 0 0 4,483 On-balance sheet PFI contracts 0 278,459 0 0 0 0 0 22,991 301,450 Net Book Value at 31 March 2018 SoFP 58,155 653,546 1,062 44 51,978 4,644 369 235,800 1,005,598


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7(a) PROPERTY, PLANT AND EQUIPMENT - PRIOR YEAR – CONSOLIDATED

Note

Land (including

under buildings)

Buildings (excluding dwellings) Dwellings

Transport Equipment

Plant & Machinery

Information Technology

Furniture & Fittings

Assets Under Construction Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Cost or valuation At 1 April 2016 59,886 678,800 1,912 507 138,132 27,556 2,257 142,484 1,051,534 Additions - Purchased 536 0 0 0 15,965 1,212 0 120,643 138,356 Additions - Donated 0 0 0 0 244 0 0 2,233 2,477 Completions 0 53,331 0 0 410 0 0 (53,741) 0 Transfer between asset categories 4,645 (4,645) 0 0 0 0 0 0 0 Revaluation (6,193) (61,874) 40 0 0 0 0 0 (68,027) Impairment Charge 0 0 0 0 (48) 0 0 0 (48) Impairment Reversal 0 0 0 0 0 0 0 0 0 Disposals – Purchased (315) 0 (892) (75) (19,709) (541) 0 0 (21,532) Disposals – Donated 0 0 0 (30) (1,015) 0 0 0 (1,045) At 31 March 2017 58,559 665,612 1,060 402 133,979 28,227 2,257 211,619 1,101,715

Depreciation At 1 April 2016 0 41,468 57 443 93,608 22,857 1,636 0 160,069 Provided during the year – Purchased 0 21,914 76 0 10,514 2,181 127 0 34,812 Provided during the year – Donated 0 421 0 10 326 1 0 0 758 Revaluation 0 (32,264) (26) 0 0 0 0 0 (32,290) Impairment Charge 0 0 0 0 (5) 0 0 0 (5) Disposals – Purchased 0 0 (43) (75) (18,966) (541) 0 0 (19,625) Disposals – Donated 0 0 0 (30) (991) 0 0 0 (1,021) At 31 March 2017 0 31,539 64 348 84,486 24,498 1,763 0 142,698

Net book value at 1 April 2016 59,886 637,332 1,855 64 44,524 4,699 621 142,484 891,465 Net book value at 31 March 2017 SoFP 58,559 634,073 996 54 49,493 3,729 494 211,619 959,017

Open Market Value of Land, buildings and Dwellings Included Above

8,500 0 0

Asset financing: Owned - purchased 58,559 377,434 996 0 48,357 3,729 494 208,864 698,433 Owned – donated 0 5,071 0 54 1,134 0 0 2,755 9,014 Finance leased 0 4,580 0 0 2 0 0 0 4,582 On-balance sheet PFI contracts 0 246,988 0 0 0 0 0 0 246,988 Net Book Value at 31 March 2017 SoFP 58,559 634,073 996 54 49,493 3,729 494 211,619 959,017


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7b) NON CURRENT ASSETS HELD FOR SALE – CONSOLIDATED

No property assets are currently classified in the Balance Sheet as held for sale.

7(c) PROPERTY, PLANT AND EQUIPMENT DISCLOSURES - CONSOLIDATED

2017

£’000 Net book value of Property, plant and equipment at 31 March Note £’000

950,003 Purchased 994,595

9,014 Donated 11,003

959,017 Total SoFP 1,005,598

8,500 Net book value related to land valued at open market value at 31 March 8,850

Total value of assets held under:

4,582 Finance Leases 4,483

246,988 PFI and PPP Contracts 301,450

251,570 305,933 Total depreciation charged in respect of assets held under:

262 Finance leases 269

5,963 PFI and PPP contracts 7,111

6,225 7,380

In line with the Board’s revaluation policy a sample was revalued by an independent valuer, GVA at 31 March 2017 on the basis of fair value (market value or depreciated replacement cost where appropriate). The values were computed in accordance with the Royal Institute of Chartered Surveyors Statement of Asset Valuation Practice and Guidance notes, subject to the special accounting practices of the NHS. The net impact was an increase in value of £7.989m (2016/17 decrease of £35.780m) which was credited to revaluation reserve. Impairment of £10.289m (2016/17 £28.272m) was charged to the Statement of Comprehensive Net Expenditure and Summary of Resource Outturn.

7(d) ANALYSIS OF CAPITAL EXPENDITURE

2016/17

£’000 EXPENDITURE Note £’000

6 Acquisition of Intangible Assets 6 669

138,356 Acquisition of Property, plant and equipment 7a 78,322

2,477 Donated Asset Additions 7a 2,564

555 Hub enabling expenditure 0

141,394 Gross Capital Expenditure 81,555

INCOME

1,907 Net book value of disposal of Property, plant and equipment 7a 4,960

24 Net book value of disposal of Donated Assets 7a 0

0 HUB – repayment of investment 1

2,501 Donated Asset Capital income 2,564

4,432 Capital Income 7,525

136,962 Net Capital Expenditure 74,030

SUMMARY OF CAPITAL RESOURCE OUTTURN

The summary outturn against core and non-core allocations of capital expenditure was as follows: Core

Non Core Total

136,962 Net capital expenditure as above 50,373 23,657 74,030

136,962 Capital Resource Limit 50,373 23,657 74,030

0 Saving/(excess) against Capital Resource Limit 0 0 0


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8. INVENTORY

2017

£’000 Note

17,450 Raw Materials and Consumables 17,633

17,450 Total Inventories SoFP 17,633

9. TRADE AND OTHER RECEIVABLES

Consolidated 2017

Board 2017

Consolidated Board

£’000 £’000 Note £’000 £’000

Receivables due within one year

NHS Scotland

70 70 SGHSCD 152 152

14,279 14,279 Boards 17,997 17,997

14,349 14,349 Total NHS Scotland Receivables 18,149 18,149

212 212 NHS Non-Scottish Bodies 1,682 1,682

1,677 1,677 VAT recoverable 2,088 2,066

21,847 21,847 Prepayments 19,098 19,098

17,983 17,983 Accrued income 23,492 15,115

9,828 9,229 Other Receivables 5,044 5,148

47,479 47,479 Reimbursement of provisions 13,803 13,803

2,343 2,343 Other Public Sector Bodies 1,386 1,386

115,718 115,119 Total Receivables due within one year SoFP 84,742 76,447

Receivables due after more than one year

694 694 Prepayments 494 494

5 5 Other Receivables 3 3

43,909 43,909 Reimbursement of Provisions 81,390 81,390

44,608 44,608 Total Receivables due after more than one year SoFP 81,887 81,887

160,326 159,727 TOTAL RECEIVABLES 166,629 158,334

2,747 2,747 The total receivables figure above includes a provision for bad debts of : 3,615 3,615

Movements on the provision for impairment of receivables are as follows:

Consolidated 2017

Board 2017

Consolidated Board

£’000 £’000 £’000 £’000

1,853 1,853 At 1 April 2,747 2,747

2,831 2,831 Provision for receivables impairment 2,768 2,768

(275) (275) Receivables written off during the year as uncollectable (464) (464)

(1,662) (1,662) Unused amounts reversed (1,436) (1,436)

2,747 2,747 At 31 March 3,615 3,615


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10. INVESTMENTS

Consolidated

2017

Board

2017

Consolidated

Board

£’000 £’000 Note £’000 £’000

17,817 0 UK equities & investment trusts 18,406 0

36,305 0 Non UK equities & investment trusts 33,373 0

9,008 0 Fixed Interest securities 12,395 0

13,248 2,110 Other 15,287 2,109

76,378 2,110 TOTAL SoFP 79,461 2,109

67,167 1,555 At 1 April 76,378 2,110

11,164 555 Additions CFS 12,353 0

(12,462) 0 Disposals (10,587) (1)

10,509 0 Revaluation (deficit)/surplus transferred to equity 2a 1,317 0

76,378 2,110 At 31 March 79,461 2,109

0 0 Current SoFP 2,000 0

76,378 2,110 Non-current SoFP 77,461 2,109

76,378 2,110 At 31 March 79,461 2,109

Other Financial Assets available for sale comprise:

33 Loans to Hub South East Scotland Limited 33

33 33

The Edinburgh & Lothian Health Foundation (ELHF) has a pooled investment portfolio with NHS Lanarkshire which is managed by independent investment managers, Schroders. These investments are categorised as level 1 in accordance with IFRS13. Only the ELHF share of the investments is recorded within the Foundations’ Financial Statements and is included within the consolidated Board statements. At year end 2017/18 there were investments of £66,179k and cash awaiting investment £55k. The NHS Lanarkshire share was 6.49% of the total portfolio managed by Casenove (Schroders). ELHF also holds investment properties of £11,120 these are solely owned by ELHF. The investments in the shares of Hub South East Scotland Limited are unlisted and are denominated in UK pounds sterling. These investments are categorised as level 2 in accordance with IFRS13 and are valued at cost less impairment. The loan to Hub South East Scotland Limited is also denominated in UK pounds sterling. The Board owns 11.11% of the share capital of Hub South East Scotland Limited and holds its shares alongside 9 public and private sector partners, including the Scottish Futures Trust, a company controlled by Scottish Ministers. The Board has made a loan of £33k to Hub South East Scotland Limited, and also advanced a further £267k to its public sector partners, to enable them to finance the initial working capital requirements of Hub South East Scotland Limited. NHS Lothian is entitled to recover the full economic cost of activity in support of Hub South East Scotland and has no requirement to under-write any reported trading losses of these companies. The carrying value of the investment is cost less impairment as there is no active market for the equity investment in Hub South East Scotland Limited.


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11. CASH AND CASH EQUIVALENTS

At

01/04/17 Cash Flow

At 31/03/18

Note £’000 £’000 £’000 Government Banking Service account balance 12,755 (7,853) 4,902 Cash at bank and in hand 105 21 126 Endowments 2,448 2,178 4,626 Total cash – balance sheet SoFP 15,308 (5,654) 9,654

Prior Year

At

01/04/16 Cash Flow

At 31/03/17

£’000 £’000 £’000 Government Banking Service account balance 623 12,132 12,755 Cash at bank and in hand 73 32 105 Endowment cash 2,257 191 2,448 Total cash – balance sheet 2,953 12,355 15,308

Cash at bank is with major UK banks. The credit risk associated with cash at bank is considered to be low.

12. TRADE AND OTHER PAYABLES

Consolidated 2017

Board

2017

Consolidated

Board

£’000 £’000 Note £’000 £’000

Payables due within one year

NHS Scotland

1,065 1,065 SGHSCD 270 270

5,599 5,599 Boards 6,578 6,578

6,664 6,664 Total NHS Scotland Payables 6,848 6,848

2,296 2,296 NHS Non-Scottish Bodies 2,425 2,425

12,860 12,860 General Fund Payable 5,028 5,028

27,443 27,443 FHS Practitioners 28,042 28,042

548 548 Trade Payables 1,152 1,099

86,414 83,425 Accruals 103,602 101,139

19,003 19,003 Deferred Income 18,205 18,205

0 0 Net obligations under Finance Leases 17

6,990 6,990 Net obligations under PPP/PFI Contracts 18b 8,415 8,415

18,590 18,590 Income tax and social security 20,092 20,092

13,139 13,139 Superannuation 13,677 13,677

(33) (33) Other Public Sector Bodies

1,573 1,573 Other payables 2,874 2,874

11,256 11,256 Employee Benefits 12,014 12,014

2,037 2,037 Pay and Conditions Accrual 1,787 1,787

7,740 7,740 Capital Accruals 17,991 17,991

216,520 213,531 Total Payables due within one year SoFP 242,152 239,636

Payables due after more than one year

7,413 7,413 Net obligations under PPP/PFI Contracts due within 1-2 years 18 9,404 9,404

28,533 28,533 Net obligations under PPP/PFI Contracts due after 2 years but within 5 years 18 35,643 35,643

174,982 174,982 Net obligations under PPP/PFI Contracts due after 5 years 18 203,160 203,160

151 0 Accruals 0 0

166,493 166,493 NPDs 152,921 152,921

377,572 377,421 Total Payables due after more than one year SoFP 401,128 401,128

594,092 590,952 TOTAL PAYABLES 643,280 640,764


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12. TRADE AND OTHER PAYABLES (continued)

Consolidated 2017

Board 2017

Consolidated Board

£’000 £’000 £’000 £’000

Borrowings included above comprise:

0 0 Finance Leases 0 0

217,918 217,918 PFI Contracts 256,622 256,622

217,918 217,918 256,622 256,622

The carrying amount and fair value of the non-current borrowings are as follows:

Carrying amount

210,928 210,928 PFI Contracts 248,207 248,207

210,928 210,928 248,207 248,207

Fair value

204,875 204,875 Finance Leases 237,372 234,372

173,350 173,350 PFI Contracts 166,756 166,756

378,225 378,225 404,128 401,128

The carrying amount of short term payables approximates to their fair value and is denominated in Pounds. 13a.PROVISIONS – CONSOLIDATED

2017 Pensions &

similar obligations

Clinical & Medical

Negligence

Participation in CNORIS

Other Total

£'000 £’000 £’000 £’000 £’000 £’000

119,357 At 1 April 2017 23,502 92,778 103,156 1,529 220,965

116,567 Arising during the year 1,184 9,165 25,490 518 36,357

(5,941) Utilised during the year (1,640) (2,798) (4,660) (709) (9,807)

(8,205) Unwinding of discount 2 0 (477) 0 (475)

(813) Reversed unutilised (188) (1,623) (9,348) (804) (11,963)

220,965 At 31 March 2018 22,860 97,522 114,161 534 235,077

The amounts shown above in relation to Clinical & Medical Claims against NHS Lothian are stated gross and the amount of any expected reimbursements are separately disclosed as receivables in Note 9. Other provisions include an amount of £534k for non medical CNORIS. Analysis of expected timing of discounted cash flows:

2017 Pensions &

similar obligations

Clinical & Medical

Negligence

Participation in CNORIS

Other Total

£'000 £’000 £’000 £’000 £’000 £’000

75,069 Payable within one year 1,638 14,305 18,799 524 35,266

108,745 Payable between 2 -5 years 0 68,666 73,744 10 142,420

4,109 Payable between 6 – 10 years 0 1,402 2,643 0 4,045

33,042 Thereafter 21,222 13,149 18,975 0 53,346

220,965 At 31 March 2018 22,860 97,522 114,161 534 235,077


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Pensions and similar obligations The board meets the additional cost of benefits beyond the normal National Health Service Superannuation Scheme for Scotland benefits in respect of employees who retire early by paying the required amounts annually to the National Health Service Superannuation Scheme for Scotland over the period between early departure and normal retirement date. The Board provides for this in full when the early retirement programme becomes binding by establishing a provision for the expected share of payments over the remaining lives of the former employees, discounted by the Treasury discount rate of 0.10% (2016/17: 0.24%). The Board expects expenditure to be charged to this provision for a period of up to 30 years. Clinical & Medical Negligence The Board holds a provision to meet the costs of all outstanding and potential clinical and medical negligence claims. All legal claims notified to the Board are processed by the Scottish NHS Central Legal Office who will decide upon risk liability and likely outcome of each case. The provision contains sums for settlement awards, legal expenses and third party costs. Clinical and medical negligence cases lodged can be extremely complex. It is expected that expenditure will be charged to this provision for up to 10 years. The amounts disclosed are stated gross and the amount of any expected reimbursements from the Clinical Negligence and Other Risks Insurance Scheme (CNORIS) is shown separately as receivables in Note 9 to the accounts. Reimbursements yet to be received are included in current and long term trade receivables.

13b.CLINICAL NEGLIGENCE AND OTHER RISKS INDEMNITY SCHEME (CNORIS)

2017 2018

£’000 Note £’000

94,307 Provision recognising individual claims against the NHS Board as at 31 March 13a 98,056

(91,388) Associated CNORIS receivable at 31 March 9 (95,193) 103,156 Provision recognising the NHS Board’ liability from participating in the scheme at 31 March 13a 114,161

106,075 Net Total Provision relating to CNORIS at 31 March 117,024

The Clinical Negligence and Other Risks Scheme (CNORIS) has been in operation since 2000. Participation in the scheme is mandatory for all NHS boards in Scotland. The scheme allows for risk pooling of legal claims in relation to clinical negligence and other risks and works in a similar manner to an insurance scheme. CNORIS has an agreed threshold of £25k and any claims with a value less than this are met directly from within boards’ own budgets. Participants e.g. NHS boards contribute to the CNORIS pool each financial year at a pre-agreed contribution rate based on the risks associated with their individual NHS board. If a claim is settled the board will be reimbursed by the scheme for the value of the settlement, less a £25k “excess” fee. The scheme allows for the risk associated with any large or late in the financial year legal claims to be managed and reduces the level of volatility that individual boards are exposed to. When a legal claim is made against an individual board, the board will assess whether a provision or contingent liability for that legal claim is required. If a provision is required then the board will also create an associated receivable recognising reimbursement from the scheme if the legal claim settles. The provision and associated receivable are shown in the first two lines above. The receivable has been netted off against the provision to reflect reimbursement from the scheme. As a result of participation in the scheme, boards should also recognise that they will be required to make contributions to the scheme in future years. Therefore a second provision that recognises the board’s share of the total CNORIS liability of NHS Scotland has been made and this is reflected in third line above. Therefore there are two related but distinct provisions required as a result of participation in the scheme. Both of these provisions as well as the associated receivable have been shown in the note above to aid the reader’s understanding of CNORIS. Further information on the scheme can be found at: http://www.clo.scot.nhs.uk/our-services/cnoris.aspx


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14. CONTINGENT LIABILITIES The following contingent liabilities have not been provided for in the Accounts:

2017

£’000 £’000

69,822 Clinical and medical compensation payments 127,549

423 Other 505 70,245 128,054 The following contingent assets have not been provided for in the Accounts:

2017

£’000 £’000 (68,685) Clinical and medical negligence contingent assets (126,268)

In the normal course of business, medical incidents may have occurred but may not yet be reported to the Board and so cannot be quantified with sufficient degree of certainty to allow an assessment to be made as to whether or not provision is required. Accordingly no provision has been reported in these Accounts.

Other non-quantifiable contingent liabilities So far as the members are aware, the Board has not entered into any guarantee arrangement, indemnity nor provided any letter of comfort which would give rise to a contingent liability within the meaning of IAS 37.

15. EVENTS AFTER THE REPORTING PERIOD

There were no Post Balance Sheet date events having a material effect on the accounts.


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16. COMMITMENTS – CONSOLIDATED (a) Capital Commitments The Board have the following capital commitments which have not been provided for in the accounts:

2017

£’000 Contracted £’000

1,448 Royal Hospital for Sick Children/DCN enablement 16,879

25 Aseptic Pharmacy Modernisation 25

67 REH Phase 1 10

3,212 Microbiology Automation 0

1,445 Ward 20 10

348 Medical Equipment 59

474 BLM 315

0 St John’s Hospital Boiler replacement 4,852

1,297 Other Commitments 612

8,316 22,762

Authorised but not Contracted

33,206 Royal Hospital for Sick Children and DCN project (Hub) 14,831

2,491 Endoscopy Decon Unit WGH 0

1,114 Aseptic Pharmacy Modernisation 0

1,749 REH Phase 1 0

10,544 Partnership Centre Bundle 0

358 Prestonpans 0

24 Islay Unit 0

1,229 Office Property Rationalisation 187

2,802 Anti Ligature 2,450

1,718 MRI Scanner 0

3,106 Demolition and Site Enabling 0

0 ELCH Decant 1,653

0 ELCH Equipment 3,100

0 Radiotherapy 2,602

1,809 Other 403

60,150 Total 25,226

(b) Other financial commitments The Board has no other financial commitments (c) Financial Guarantees, Indemnities and Letters of Comfort The Board has not entered into any quantifiable guarantee, or indemnity or letter of comfort arrangement which would require evaluation under IAS 39.


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17. LEASES – CONSOLIDATED Total future minimum lease payments under operating and finance leases are given in the table below for the each of the following periods.

2017

£'000 Operating Leases £'000

Buildings

3,610 Not later than one year 5,605

3,067 Later than one year but not later than two years 5,454

9,107 Later than two but not later than five years 16,011

21,006 Later than five years 25,027

Other

2,129 Not later than one year 1,935

1,174 Later than one year but no later than two years 1,131

1,117 Between two and five years (inclusive) 861

Amounts charged to Operating Costs in year were:

5,445 Hire of equipment (including vehicles) 6,351

6,002 Other operating leases 5,763

11,447 12,114


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18. PFI CONTRACTS – CONSOLIDATED The Board has entered into the following on-balance sheet PFI contracts. Description of

Scheme Start

Date End Date Estimated

capital value £’000

Royal Infirmary of Edinburgh

Acute teaching hospital facilities 01/11/01 30/06/53 177,828

Midlothian Community Hospital

This hospital provides 88 beds for frail elderly and dementia patients, outpatient clinics and a base for CHP led community activities.

01/09/10 31/08/40 14,747

Ferryfield This service provides a 30 bedded facility for frail elderly and dementia patients and replaced the 100 year old Northern General Hospital

01/10/96 01/10/21 3,091

Ellens Glen This service provides a 60 bedded facility for frail elderly and dementia patients

01/11/99 01/11/29 3,848

Findlay House This service provides a 60 bedded facility for frail elderly and dementia patients in the grounds of the Eastern General Hospital

13/06/03 12/06/33 3,916

Tippethill This service provides a 60 bedded facility for frail elderly and dementia patients at Whitburn

06/09/00 05/09/25 2,649

Bathgate Primary Care Centre

This service provides a Primary Care Centre which accommodates 3 GP Practices and the CHP’s community activities in the locality

01/10/01 30/09/26 2,161

Royal Edinburgh Hospital phase 1

This service provides 185 beds for both mental health services and a national acquired brain injury service

05/12/16 04/12/41 39,737

Allermuir Health Centre An integrated primary care facility, combining General Practice and NHS community health services in the Firhill area of Edinburgh

25/09/17 24/09/42 6,164

Blackburn Partnership Centre

This facility includes health and social care services as well as community services for local residents

22/09/17 21/09/42 8,045

Pennywell All Care Centre

A joint development between NHS Lothian and the City of Edinburgh Council, providing health and social care services for the local community

23/10/17 22/10/42 11,081

East Lothian Community Hospital Phases 1 and 2

The project will bring together services from Roodlands and Herdmanflat onto the same site. Phase 1 and 2 of the project include reprovision of the outpatients department and car parking facilities.

Phase 1 – 10/02/17

Phase 2 – 23/02/18

30/08/44 5,648

The balance of the risks and rewards of ownership of on balance sheet PFI/PPP property are borne by the Board and included in the Board’s accounts as property. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements; imputed finance lease charges and service charges. The imputed finance lease obligations are as follows:


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Primary Care Facilities include the following properties:- Tippethill, Findlay House, Ferryfield House, Ellens Glen House and Bathgate Primary Care

2017

’000Imputed finance lease obligation under on-balance-sheet PFI/PPP contracts comprises:

£’000

38,111 Rentals due within 1 year 40,526 36,746 Rentals due within 1 to 2 years 40,514

110,241 Rentals due within 2 to 5 years 121,514 430,237 Rentals due thereafter 463,641

615,335 666,195 (397,417) Less interest element (409,573)

217,918 Total 256,622

The amount charged to the Statement of Comprehensive Net Expenditure in respect of costs relating to on balance sheet PFI contracts was as follows:

2017

£’000 £’000

22,116 Service charges 12,990

28,438 Interest charges on finance lease debt 31,170

5,473 Principle repayment 7,183

56,027 Total 51,343

2017

Primary

Care

facilities

Midlothian

Community

Hospital

RIE

Little

France

P1 Royal

Edinburgh

Allermuir

Health

Centre

Blackburn

Partnership

Centre

Pennywell

All Care

Centre

ELCH

Phase

1+2

2018

TOTAL

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

38,111 1,686 1,252 31,259 3,162 568 443 813 1,343 40,526

36,746 1,686 1,252 31,259 3,162 568 443 813 1,331 40,514

110,241 5,059 3,757 93,777 9,487 1,705 1,330 2,439 3,960 121,514

430,237 10,006 21,956 308,769 59,021 11,118 8,689 15,898 28,184 463,641

615,335 18,437 28,217 465,064 74,832 13,959 10,905 19,963 34,818 666,195

2017

Primary

Care

facilities

Midlothian

Community

Hospital

RIE

Little

France

P1 Royal

Edinburgh

Allermuir

Health

Centre

Blackburn

Partnership

Centre

Pennywell

All Care

Centre

ELCH

Phase

1+2

2018

TOTAL

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

(31,121) (1,305) (818) (25,362) (2,460) (447) (225) (563) (931) (32,111)

(29,333) (1,267) (802) (24,507) (2,414) (439) (219) (551) (911) (31,110)

(81,708) (3,512) (2,299) (67,058) (6,933) (1,266) (616) (1,574) (2,613) (85,871)

(255,255) (5,532) (8,914) (196,874) (25,563) (4,921) (2,146) (5,844) (10,687) (260,481)

(397,417) (11,616) (12,833) (313,801) (37,370) (7,073) (3,206) (8,532) (15,142) (409,573)

2017

Primary

Care

facilities

Midlothian

Community

Hospital

RIE

Little

France

P1 Royal

Edinburgh

Allermuir

Health

Centre

Blackburn

Partnership

Centre

Pennywell

All Care

Centre

ELCH

Phase

1+2

2018

TOTAL

£000 £000 £000 £000 £000 £000 £000 £000 £000 £000

6,990 Rentals due within 1 year 12 381 434 5,897 702 121 218 250 412 8,415

7,413 Due within 1 to 2 years 12 419 450 6,752 748 129 224 262 420 9,404

28,533 Due within 2 to 5 years 12 1,547 1,458 26,719 2,554 439 714 865 1,347 35,643

174,982 Due after 5 years 12 4,474 13,042 111,895 33,458 6,197 6,543 10,054 17,497 203,160

217,918 6,821 15,384 151,263 37,462 6,886 7,699 11,431 19,676 256,622

Due within 2 to 5 years

Due after 5 years

Total interest

Under IFRIC 12 the asset is treated as an asset of the Board and included in the Board’s accounts as a non current asset. The liability to pay for the property is in

substance a finance lease obligation. Contractual payments therefore comprise two elements; imputed finance lease charges and service charges. The imputed

finance lease obligation is as follows:

Total commitments

Gross Minimum Lease Payments

Total obligations under on-balance sheet PFI / PPP / Hub contracts for the following periods comprises:

Present value of minimum

lease paymentsNote

Rentals due within 1 year



Due after 5 years

Total Gross minumum lease payments

Less Interest Element

Rentals due within 1 year



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Contingent rents included within the interest charges were £5,702k (2016-17: £5,167k) 19. PENSION COSTS The NHS Board participates in the NHS Superannuation Scheme (Scotland). The scheme is an unfunded statutory public service pension scheme with benefits underwritten by the UK Government. The scheme is financed by payments from employers and from those current employees who are members of the scheme and paying contributions at progressively higher marginal rates based on pensionable pay, as specified in the regulations. The rate of employer contributions is set with reference to a funding valuation undertaken by the scheme actuary. The last four-yearly valuation was undertaken as at 31 March 2012. The next valuation will be as at 31 March 2016 and this will set contribution rates from 1 April 2019. The NHS board has no liability for other employers obligations to the multi-employer scheme. As the scheme is unfunded there can be no deficit or surplus to distribute on the wind-up of the scheme or withdrawal from the scheme. The scheme is an unfunded multi-employer defined benefit scheme. It is accepted that the scheme can be treated for accounting purposes as a defined contribution scheme in circumstances where the NHS board is unable to identify its share of the underlying assets and liabilities of the scheme. The employer contribution of £100.3m were payable to SPPA (2016/17 £97.3m) at the rate of 14.9% (2016/17 14.9%) of pensionable pay for the period from 1 April 2015. While the employee rate applied is a variable it will provide an actuarial yield of 9.8% of pensionable pay. At the last valuation a shortfall of £1.4 billion was identified in the notional fund which will be repaid by a supplementary rate of 2.6% of employers pension contributions for fifteen years from 1 April 2015. This contribution is included in the 14.9% employers contribution rate. The NHS board level of participation in the scheme is 13% based on the proportion of employer contributions paid in 2016 -17.

Description of schemes The new NHS Pension Scheme (Scotland) 2015 From 1 April 2015 the NHS Pension Scheme (Scotland) 2015 was introduced. This scheme is a Career Average Re-valued Earnings (CARE) scheme. Members will accrue 1/54 of their pay as pension for each year they are a member of the scheme. The accrued pension is re-valued each year at an above inflation rate to maintain its buying power. This is currently 1.5% above increases to the Consumer Prices Index (CPI). This continues until the member leaves the scheme or retires. In 2017-18 members paid tiered contribution rates ranging from 5.2% to 14.7% of pensionable earnings. The normal pension age (NPA) is the same as the State Pension age. Members can take their benefits earlier but there will be a deduction for early payment. The existing NHS Superannuation Scheme (Scotland) This scheme closed to new joiners on 31 March 2015 but any benefits earned in either NHS 1995 or NHS 2008 sections are protected and will be paid at the section’s normal pension age using final pensionable pay when members leave or retire. Some members who were close to retirement when the NHS 2015 scheme launched will continue to earn benefits in their current section. This may affect members who were paying into the scheme on 1 April 2012 and were within 10 years of their normal retirement age. Some members who were close to retirement but did not qualify for full protection will remain in their current section beyond 1 April 2015 and join the 2015 scheme at a later date. All other members automatically joined the NHS 2015 scheme on 1 April 2015. Further information is available on the Scottish Public Pensions Agency (SPPA) web site at www.sppa.gov.uk.


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National Employment Savings Trust (NEST) The Pensions Act 2008 and 2011 Automatic Enrolment regulations required all employers to enrol workers meeting certain criteria into a pension scheme and pay contributions toward their retirement. For those staff not entitled to join the NHS Superannuation Scheme (Scotland), the Board utilised an alternative pension scheme called NEST to fulfil its Automatic Enrolment obligations. NEST is a defined contribution pension scheme established by law to support the introduction of Auto Enrolment. Contributions are taken from qualifying earnings, which are currently from £5,876 up to £45,000, but will be reviewed every year by the government. The initial employee contribution is 1% of qualifying earnings, with an employer contribution of 1%. This will increase in stages to meet levels set by government.

Date Employee Contribution

Employer Contribution

Total Contribution

1st March 2013 1% 1% 2%

1st October 2018 3% 2% 5%

1st October 2019 5% 3% 8%

Pension members can chose to let NEST manage their retirement fund or can take control themselves and alter contribution levels and switch between different funds. If pension members leave the Board they can continue to pay into NEST. NEST Pension members can take money out of NEST at any time from age 55. If suffering from serious ill health or incapable of working due to illness members can request to take money out of NEST early. They can take the entire retirement fund as cash, use it to buy a retirement income or a combination. Additionally members can transfer their NEST retirement fund to another scheme. NEST is run by NEST Corporation, a trustee body which is a non-departmental public body operating at arm’s length from government and is accountable to Parliament through the Department for Work and Pensions.

2017 2018

£'000 £'000

97,336 Pension cost charge for the year 100,286 23,502 Provisions/Liabilities/Pre-payments included in the Balance Sheet 22,860

20. PRESENTATION OF SOCNE The presentation of the Statement of Comprehensive Net Expenditure has been changed following a review of our financial statements in order to provide information which better reflects the activities of NHS Lothian. The comparative information in respect of 2016-17 has been presented in the new format in the SoCNE. [No retrospective restatements were required. The comparative information in respect of 2016-17 has been restated. Details of the restatement can be found in Note 20.] Changes to the presentation of the SoCNE affect expenditure and income categories. Staff costs and expenditure on drugs and medical supplies have been removed from previous expenditure categories and are now shown on the face of the SoCNE. This provides greater transparency over the nature of NHS Lothian's expenditure. Further information on the composition of expenditure categories is disclosed in Note 3. Income is now shown as a single figure. Further details are disclosed in Note 4.

2016/17 expenditure as published 2017/18

Hospital and Community 2,418,458

Family Health 391,119

Administration Costs 7,038

Other Non-Clinical Services 87,813

Gross expenditure for the year 2,904,428


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2016/17 expenditure conforming to the new presentation 2017/18

Staff Costs 942,641

Other expenditure

Independent Primary Care Services 222,310

Drugs and medical supplies 367,156

Other health care expenditure 1,372,321

Gross expenditure for the year 2,904,428

Movement in gross expenditure for the year 0

2016/17 income as published 2017/18

Hospital and Community Income 1,122,613

Family Health Income 13,095

Administration Income 0

Other Operating Income 96,226

Gross income for the year 1,231,934

2016/17 income conforming to the new presentation 2017/18

Operating income 1,231,934

Gross income for the year 1,231,934

Movement in gross income for the year 0

21. RETROSPECTIVE RESTATEMENTS

There were no Prior year adjustments


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22. FINANCIAL INSTRUMENTS - CONSOLIDATED

2017 AT 31 MARCH 2018 Loans and

Receivables Available for

sale Total

£’000 Note £’000 £’000 £’000 Assets per balance sheet

76,378 Investments 10 79,461 79,461 30,371 Trade and other receivables excluding

prepayments, reimbursements of provisions and VAT recoverable. 9

31,607 31,607

15,308 Cash and cash equivalents 11 9,654 9,654

122,057 41,261 79,461 120,722

2017 Other

Financial Liabilities

Total

£’000 Note £’000 £’000 Liabilities per balance sheet

0 Finance lease liabilities 12 217,918 PFI Liabilities 12 256,622 256,622

152,285

Trade and other payables excluding statutory liabilities (VAT and income tax and social security) 12

174,915 174,915

370,203 431,537 431,537

FINANCIAL INSTRUMENTS – Board

2017 AT 31 MARCH 2018 Loans and

Receivables Available for

sale Total

£’000 Note £’000 £’000 £’000 Assets per balance sheet

2,110 Investments 10 2,109 2,109 29,772 Trade and other receivables excluding

prepayments, reimbursements of provisions and VAT recoverable.

23,334 23,334

12,860 Cash and cash equivalents 11 5,028 5,028

44,742 28,362 2,109 30,471

2017

Other Financial Liabilities

Total

Note £’000 £’000 Liabilities per balance sheet

0 Finance lease liabilities 12 217,918 PFI Liabilities 12 256,622 256,622 149,145 Trade and other payables excluding

statutory liabilities (VAT and income tax and social security)

172,399 172,399

367,063 429,021 429,021


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Financial Risk Factors

Exposure to Risk

The NHS Board's activities expose it to a variety of financial risks:

• Credit risk - the possibility that other parties might fail to pay amounts due • Liquidity risk - the possibility that the NHS Board might not have funds available to meet its

commitments to make payments • Market risk - the possibility that financial loss might arise as a result of changes in such

measures as interest rates, stock market movements of foreign exchange rates.

Because of the largely non-trading nature of its activities and the way in which government departments are financed, the NHS Board is not exposed to the degree of financial risk faced by business entities. The Board provides written principles for overall risk management, as well as written policies covering: i) Credit Risk Credit risk arises from cash and cash equivalents, deposits with banks and other institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. For banks and other institutions, only independently rated parties with a minimum rating of 'A' are accepted. Customers are assessed, taking into account their financial position, past experience and other factors, with individual credit limits being set in accordance with internal ratings in accordance with parameters set by the NHS Board. The utilisation of credit limits is regularly monitored. No credit limits were exceeded during the reporting period and no losses are expected from non-performance by any counterparties in relation to deposits. ii) Liquidity Risk The Scottish Parliament makes provision for the use of resources by the NHS Board for revenue and capital purposes in a Budget Act for each financial year. Resources and accruing resources may be used only for the purposes specified and up to the amounts specified in the Budget Act. The Act also specifies an overall cash authorisation to operate for the financial year. The NHS Board is not therefore exposed to significant liquidity risks. The table below analyses the financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

iii) Market Risk The NHS Board has no powers to borrow or invest surplus funds. Financial assets and liabilities are generated by day-to-day operational activities and are not held to manage the risks facing the NHS Board in undertaking its activities.

Less than 1

year

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

TOTAL

PFI Liabilities 8,415 9,404 35,643 203,160 256,622

Trade and other payables excluding statutory liabilities 6,451 0 0 0 6,451

At 31 March 2018 (£’000) 14,866 9,404 35,643 203,160 263,073

At 31 March 2017 (£’000) 14,575 7,413 28,533 174,982 225,503


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Cash flow and fair value interest risk The NHS Board has no significant interest bearing assets or liabilities and as such income and expenditure cash flows are substantially independent of changes in market interest rates. Foreign Currency Risk The NHS Board is not exposed to foreign exchange rates except through occasional ad-hoc settlement of purchase liabilities denominated in non sterling currencies. The Foundation holds non Sterling equities and bonds and is therefore exposed to foreign currency risk. Price risk The NHS Board is not exposed to equity security price risk. The Foundation holds equities and bonds and is therefore exposed to equity price risk. This risk is managed by the investment managers.

Fair Value Estimation The fair value of financial instruments that are not traded in an active market is determined using valuation techniques based on future projected cash flows. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair value. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current HM Treasury interest rate that is available for similar financial instruments Derivative Financial Instruments and Forward Currency Exchange Contracts At 31 March 2017 there were no principal amounts outstanding in respect of forward currency exchange contracts and there were no amounts credited or charged to the Statement of Consolidated Comprehensive Net Expenditure in respect of gains or losses on such contracts in the year ended 31 March 2018.

23. THIRD PARTY ASSETS

The Board holds funds on behalf of those inpatients that are highly dependent and not capable of handling their financial affairs when admitted to and during their stay in hospital. Transactions made on behalf of such patients and residual funds are subject to regular audit. These are not departmental assets and are not included in the accounts. The assets held at the reporting period date to which it was practical to ascribe monetary values comprised monetary assets, such as bank balances and monies on deposit. The amounts and movements in year are set out in the table immediately below.

At 31 March 2017

Gross Inflows

Gross Outflows

At 31 March 2018

£’000 £’000 £’000 £’000

Bank balances and monies on deposit 1,235 1,073 (1,278) 1,030

Total Monetary Assets 1,235 1,073 (1,278) 1,030


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24. RELATED PARTY TRANSACTIONS

(a) By virtue of their membership of the Board, executive and non-executive members are Trustees of the Lothian NHS Endowment Fund, which is a registered Scottish Charity and which expends donations for any NHS purpose and in accordance with the donor of the funds. During 2017/18 the funds spent a total of £14.53m (2016/17: £4.05m), in support and in addition to, NHS funded supplies and services, including capital projects. NHS Lothian had a trading balance due from the Lothian NHS Endowment Fund of £106,485 as at 31 March 2018 (31 March 2017: £385,170).

(b) Mr Harry Cartmill is a non-executive member of NHS Lothian and is a director of West Lothian Leisure. In 2016/17, NHS Lothian’s made payments to West Lothian Leisure in relation to health service provision that amounted to £108,104 (2016/17: £108,104). (c) Mr Martin Fennelly Hill is a non executive member of NHS Lothian and is a non executive member of Scottish Environmental Protection Agency. In 2017/18 NHS Lothian made payments to Scottish Environmental Protection Agency in relation to health service provision that amounted to £47,945. (d) Mr Brian Houston is a non executive member of NHS Lothian and is a director of Hibernian Football Club. In 2017/18 NHS Lothian made payments to Hibernian Football Club in relation to health service provision that amounted to £49,703 (2016/17: £69,318).

(e) The Board enters into transactions with other Scottish Government and United Kingdom Government agencies and publicly funded bodies (such as Councils and educational institutions) in the ordinary course of its operations. These transactions take place at arms length. Scottish Ministers issue instructions and guidance on special transactions between publicly funded bodies in areas such as property transfers and joint venture investments.

(f) During 2015/16 a new integration joint board (IJB) was established in each of the four local authority areas within the NHS Lothian boundary, under the terms of the Public Bodies (Joint Working) (Scotland) Act 2014. The IJBs are distinct legal entities the NHS Board and the relevant local authority. The NHS Board and the relevant local authority have delegated some of their functions to these IJBs, and each IJB is wholly responsible for carrying out those functions. The new arrangements for health and social care came fully into effect on 1 April 2016.

• City of Edinburgh Integration Joint Board. The Health Board has incurred costs of £511,336k (2016/17: £486,290k) for its contribution to the IJB. The draft, unaudited, Accounts of Edinburgh IJB indicate that resource transfer has been presented differently and shown as Social Care expenditure in the IJB accounts. This presentation difference has no impact on the Board’s out-turn. This treatment by Edinburgh IJB is different from how the other 3 IJBs have reported.

• Mid Lothian Integration Joint Board. The Health Board has incurred costs of £99,232k (2016/17: £96,251k) for its contribution to the IJB.

• East Lothian Integration Joint Board. The Health Board has incurred costs of £114,734k (2016/17: £109,596k) for its contribution to the IJB.

• West Lothian Integration Joint Board. The Health Board has incurred costs of £185,904k (2016/17: £176,526k) for its contribution to the IJB.


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25. GROUP STATEMENTS

LINKED STATEMENT OF CONSOLIDATED COMPREHENSIVE NET EXPENDITURE

(a) Group SOCNE Integrated Joint Board (Joint venture)

Group

2017 Note Board Endowments Intra Group

adjustment Edinburgh West East Mid Consolidated

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Total income and expenditure

942,641 Staff costs 3 978,071 978,071

Other operating expenditure

222,310 Independent Primary Care Services

3 226,399 226,399

367,156 Drugs and medical supplies 376,825 376,825

1,372,321 Other health care expenditure 1,324,688 14,533 (12,631) 1,326,590

2,904,428 Gross expenditure for the year 2,905,983 14,533 (12,631)

2,907,885

(1,231,934) Less: operating income 4 (1,218,111) (17,115) 1,631 (1,233,595)

(1,845) Joint venture accounted for on an equity basis

(2,781) (2,781)

1,670,649 Net Expenditure 1,685,091 (2,582) (11,000) 1,671,509

The intercompany adjustments relate to removal of intercompany rental income to endowments from NHS Lothian £299k, and removal of grants to NHS Lothian £12,332k. Gains from Foundation investments of £1,573k have been recognised in the Endowment ‘Other Non clinical services’ line above.

The £2,781k relates to the NHS Lothian share of £2,331k reserves movement held by Edinburgh IJB and £450k reserves held by Mid Lothian IJB as per 31st March 2018.


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LINKED CONSOLIDATED GROUP STATEMENT OF FINANCIAL POSITION (b) Group Statement of Financial Position

Integrated Joint Board (Joint Venture) Group

2017 Note Board Endowments Intra Group

adjustment Edinburgh West East Mid Group

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Non-current assets:

959,017 Property, plant and equipment SoFP 1,005,598 1,005,598

868 Intangible assets SoFP 534 534

Financial assets:

76,378 Available for sale financial assets SoFP 2,109 75,352 77,461

1,845 Investments in Joint Ventures 4,176 450 4,626

44,608 Trade and other receivables SoFP 81,887 81,887

1,082,716 Total non-current assets 1,090,128 75,352 0 4,176 0 0 450 1,170,106

Current Assets:

17,450 Inventories SoFP 17,633 17,633

Financial assets:

115,718 Trade and other receivables SoFP 76,447 8,417 (122) 84,742

15,308 Cash and cash equivalents SoFP 5,028 4,626 9,654

0 Assets classified as held for sale SoFP 2,000 2,000

148,476 Total current assets 99,108 15,043 (122) 0 0 0 0 114,029

1,231,192 Total assets 1,189,236 90,395 (122) 4,176 0 0 450 1,284,135

Current liabilities

(75,069) Provisions SoFP (35,266) (35,266)


(216,520) Trade and other payables SoFP (239,636) (2,638) 122 (242,152)

(291,589) Total current liabilities (274,902) (2,638) 122 0 0 0 0 (277,418)

939,603 Non-current assets plus/(less) net current assets/(liabilities)

914,334 87,757 0 4,176 0 0 450 1,006,717


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Non-current liabilities

(145,896) Provisions SoFP (199,811) (199,811)


(377,572) Trade and other payables SoFP (401,128) (11,000) 11,000 (401,128)

(523,468) Total non-current liabilities (600,939) (11,000) 11,000 (600,939)

416,135 Assets less liabilities 313,395 76,757 11,000 4,176 0 0 450 405,778

Taxpayers' Equity

152,686 General fund SoFP 114,270 114,270

187,429 Revaluation reserve SoFP 199,125 199,125

1,845 Joint venture reserves SoFP 4,176 450 4,626

74,175 Funds held on Trust SoFP 76,757 11,000 87,757

416,135 Total taxpayers' equity 313,395 76,757 11,000 4,176 0 0 450 405,778


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LINKED CONSOLIDATED GROUP CASHFLOWS c) Group Cashflows

2017 2017 2017

Board Endowment Group Cash flows from operating activities Board Endowment Group

£’000 £’000 £’000 £’000 £’000 £’000

(1,681,467) 10,818 (1,670,649) Net operating cost (1,685,091) 13,582 (1,671,509)

60,832 (10,509) 50,323 Adjustments for non-cash transactions 43,364 (1,317) 42,047

20,233 0 20,233 Add back: interest payable recognised in net operating cost 30,695 0 30,695

0 (1,779) (1,779) Deduct: interest receivable recognised in net operating cost 0 0 0

0 (314) (314) Investment income 0 (2,261) (2,261)

117,876 (1,971) 115,905 Movement in working capital 44,513 (8,320) 36,193

(1,482,526) (3,755) (1,486,281) Net cash outflow from operating activities (1,566,519) 1,684 (1,564,835)

Cash flows from investing activities

(135,667) 0 (135,667) Purchase of property, plant and equipment (78,322) 0 (78,322)

(6) 0 (6) Purchase of intangible assets (669) 0 (669)

(555) 0 (555) Investment Additions 0 (12,353) (12,353)

1,438 0 1,438 Proceeds of disposal of property, plant and equipment (5,373) 0 (5,373)

0 1,853 1,853 Receipts from sale of investment 0 10,586 10,586

0 2,093 2,093 Interest and dividends received 0

2,261 2,261

(134,790) 3,946 (130,844) Net cash outflow from investing activities (84,364) 494 (83,870)

Cash flows from financing activities

1,606,004 0 1,606,004 Funding 1,642,874 0 1,642,874

12,164 0 12,164 Movement in general fund working capital (7.832) 0 (7,832)

1,618,168 0 1,618,168 Cash drawn down 1,635,042 0 1,635,042

31,545 0 31,545

Capital element of payments in respect of finance leases and on-balance sheet PFI contracts 38,704 0 38,704

8,205 0 8,205 Interest paid 475 0 475

(28,438) 0 (28,438) Interest element of finance leases and on-balance sheet PFI/PPP contracts (31,170) 0 (31,170)

1,629,480 0 1,629,480 Net Financing 1,643,051 0 1,643,051

12,164 191 12,355 Net Increase / (decrease) in cash and cash equivalents in the period (7,832) 2,178 (5,654)

696 2,257 2,953 Cash and cash equivalents at the beginning of the period 12,860 2,448 15,308

12,860 2,448 15,308 Cash and cash equivalents at the end of the period 5,028 4,626 9,654

Reconciliation of net cash flow to movement in net debt/cash

12,164 191 12,355 Increase/(decrease) in cash in year (7,832) 2,178 (5,654)

696 2,257 2,953 Net debt/cash at 1 April 12,860 2,448 15,308

12,860 2,448 15,308 Net debt/cash at 31 March 5,028 4,626 9,654